tag:blogger.com,1999:blog-58796082861917806792024-03-18T19:05:27.897-04:00Pension PulseDaily Insights on Pensions and Financial MarketsLeo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.comBlogger4022125tag:blogger.com,1999:blog-5879608286191780679.post-37152445538444940762024-03-18T18:40:00.005-04:002024-03-18T19:04:55.350-04:00Ivanhoé Cambridge CEO Nathalie Palladitcheff's Last Assessment<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhLGFE6535XM6o7DqvSPtGQbwb0SPpZMtdQIO-Sfz_xaiAzjY2XvqtSD6gOu0lKnU3pm_JyVywkxYhmS1tAoVgGphOmiv_KEstWpJsd10s_Yp7YV-I6Iv02t7jmtOjfkhWUNzsrH_V4U1xzqcFXzQqBaN4xBrR_-hgSHJ_RcdLtJw4XEhZ7X3dQjXWxQlzk/s800/Nathalie%20Palladitcheff.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="533" data-original-width="800" height="266" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhLGFE6535XM6o7DqvSPtGQbwb0SPpZMtdQIO-Sfz_xaiAzjY2XvqtSD6gOu0lKnU3pm_JyVywkxYhmS1tAoVgGphOmiv_KEstWpJsd10s_Yp7YV-I6Iv02t7jmtOjfkhWUNzsrH_V4U1xzqcFXzQqBaN4xBrR_-hgSHJ_RcdLtJw4XEhZ7X3dQjXWxQlzk/w400-h266/Nathalie%20Palladitcheff.jpg" width="400" /></a></div>Jean-Philippe Décarie of La Presse <a href="https://www.lapresse.ca/affaires/2024-03-18/grande-entrevue-nathalie-palladitcheff-pdg-d-ivanhoe-cambridge/un-dernier-bilan-avant-de-nouveaux-defis.php?utm_source=dlvr.it&utm_medium=linkedin" target="_blank">interviewed</a> Ivanhoé Cambridge's outgoing CEO Nathalie Palladitcheff, offering a final assessment before she focuses on new challenges (translated from French):<br /><p></p><p></p><blockquote><p>
Nathalie Palladitcheff has completed the transformation process of Ivanhoé Cambridge that she began four years ago when she was appointed CEO of the real estate division of the Caisse de dépôt, and next month she will complete her integration into current activities of the institution before leaving his position to take on new challenges.</p><p>
Before leaving her position for good, Nathalie Palladitcheff wanted to take a final look at the nine years she spent at Ivanhoé Cambridge, including the last four as CEO.</p><p>
In her new role, she was called upon to carry out a major transformation of the real estate asset portfolio of this division which will be integrated into the Caisse's current activities at the end of April.</p><p>
<b>“I wanted to give one last interview and meet the business community [Monday noon at the Canadian Club of Montreal] to finish things off, to explain what we have achieved in four years. I owe it to our teams, to the Caisse, to Quebecers… </b></p><p>
<b>“When Michael Sabia appointed me in October 2019 and Charles Emond confirmed me in my role in January 2020, they gave me the mandate to transform Ivanhoé Cambridge, that’s what we did,” explains the outgoing CEO.</b></p><p>
As we know, the Caisse's real estate division was overexposed to the shopping center and office building sectors, well before the pandemic broke out, taken with a legacy from the late 1980s when the Caisse bought Ivanhoe Cambridge of the Steinberg family empire.</p><p>
When Nathalie Palladitcheff became CEO in 2019, Ivanhoé Cambridge had generated returns below its benchmark over five and ten-year periods. In 2023, the real estate division still showed a return lower than its index over the last five years.</p><p>
<b>“But we managed to beat the index over the last three years, we will soon surpass it over five years,” the CEO told me</b>.</p><p>
<b>Since 2020, Ivanhoé Cambridge teams have carried out no less than 300 transactions totaling 50 billion. The weight of shopping centers in total real estate assets fell from 23% to 11%, the same goes for office buildings.</b></p><p>
<b>“We halved our exposure to shopping centers and office buildings and doubled our exposure to the logistics and residential sectors, two sectors in strong growth. Despite the pandemic, we decided to accelerate our transformation despite a certain drop in value,” explains the CEO. </b></p><p>
At the end of all this activity and despite a negative return of 6.2% on the Caisse's real estate portfolio in 2023 (better than the -10% of the benchmark index...), Ivanhoé Cambridge increased the net worth by 5 billion of its assets, which increased from 40 billion in 2019 to 45.6 billion in 2023.</p><p>
<b>After the transformation, integration</b> </p><p>
In addition to the sale of numerous shopping centers, Ivanhoé Cambridge is engaged in the transformation of some of them in Canada by recycling former commercial spaces into logistics centers or residential complexes, as it has undertaken to do in its Galeries d’Anjou project.</p><p>
<b>“We want to make them multi-use assets with transport, residential and businesses and thus reduce the carbon footprint of these sites,” underlines the CEO.</b></p><p>
Could Nathalie Palladitcheff have continued her involvement at the Caisse de dépôt once the new real estate portfolio had been integrated into the institution's current activities?</p><p>
<b>“I had the mandate to transform the portfolio and it’s time to hand over the baton. I will stay until the end of the process to ensure the integration of the teams within the Caisse de dépôt and support those who will have to leave.” </b></p><p>
<b>“We will become more efficient by grouping human resources, communications and information technology activities within a single entity,” she observes.</b></p><p>
Already when she joined Ivanhoé Cambridge as Chief Financial Officer in 2015, the real estate group had 1,500 employees. <b>This number has been reduced to 490 today and will be reduced further once the integration is complete.</b></p><p>
“We left the real estate operation to concentrate on our role as an investor. In 2021, we subcontracted our 330 employees who operated shopping centers in Canada to the American group JLL. I checked recently and our 330 ex-employees are all still working,” underlines the CEO.</p><p>
<b>Even if she leaves office in a month, there is no question for Nathalie Palladitcheff of reducing the pace and taking advantage of a moment of respite. She wishes to leverage the vision she developed during the various organizational transformation experiences she has had during her professional life.</b></p><p><b>
Could her transformational experience at Ivanhoé Cambridge be used to reorganize the Quebec health system by taking the helm of Santé Québec, where all the rumors seem to be leading her?</b></p><p>
“I am focused on the mandate that I am completing and I want to support our teams until the end, but I do not intend to retire afterwards. I feel like continuing to contribute to the society that has welcomed my family and me so well,” the CEO responds very openly.</p></blockquote><p></p><p>
</p><p>With all due respect, Nathalie Palladitcheff is a real estate expert, not a health expert, and even though she knows Quebec's health minister Christian Dubé who previously worked at CDPQ, I don't think she's the most qualified person for this new and important position (great leader but stick to what you know, <b>real estate</b>, and between you and me, she'd be nuts to accept this position which pays a lot less than what she can earn elsewhere and will be heavily scrutinized by everyone in Quebec. Having said this, to be fair, she is a great leader and has tremendous experience and our healthcare system needs someone competent to fix it).</p><p>Anyway, back to the interview. As you all know, the <a href="https://pensionpulse.blogspot.com/2024/01/cdpq-to-integrate-its-real-estate.html" target="_blank">integration of CDPQ's real estate divisions</a> is still going on, and the process isn't easy because some employees on both sides will lose their job as they streamline activities to finalize the integration.</p><p>Once completed, CDPQ
expects to generate <b>annual savings of around $100 million</b> through the
synergies achieved in its processes, resources and systems.</p><p>But don't forget, in the short run, you need to pay severance packages to a lot of employees, most of whom are losing their job through no fault of their own. </p><p>Still, this integration of real estate subsidiaries needs to get done and it makes sense for a pack of reasons. It should have been done a while ago but nobody had the courage to do so (when times are good, everyone stays hush and spends like crazy).</p><p>Now, as far as what Nathalie Palladitcheff and her team achieved at Ivanhoé Cambridge, it was a radical shift, getting out of underperforming retail and offices and into logistics assets and multifamily properties all over the world.</p><p>Some pension experts told me that Ivanhoé Cambridge was so desperate to get rid of retail assets that they "practically gave them away" to REITs with extremely favorable terms.</p><p>I cannot substantiate these claims but it's fair to say they didn't get top dollar for these assets <b>and that's fine, the focus was on dumping them quickly to buy better assets that will outperform over the long run</b>.</p><p>It's the same thing when I'm trading stocks, get rid of my losers fast especially when I see better opportunities elsewhere except here we are talking about a multi-billion real estate portfolio, not exactly liquid and not easy to reposition it on a dime.</p><p>When I went over <a href="https://pensionpulse.blogspot.com/2024/02/cdpq-posts-72-return-in-2023.html" target="_blank">CDPQ's 2023 results</a>, I noted this on real estate:</p><p><span class="field field--name-title field--type-string field--label-hidden"><b></b></span></p><blockquote><p><span class="field field--name-title field--type-string field--label-hidden"><b>CDPQ's 2023 results were solid and in line with what I was expecting</b>.</span></p><p><span class="field field--name-title field--type-string field--label-hidden">Let's begin with Real Estate since that is where everyone seems to be focusing on as there are issues there.</span></p><p><span class="field field--name-title field--type-string field--label-hidden">From the Bloomberg article:</span></p><p></p><blockquote><p>Nathalie Palladitcheff, the head of Ivanhoe Cambridge, CDPQ’s real
estate arm, described last year’s environment as “hostile.” <b>High
interest rates and low occupancy have created a difficult outlook for
office owners and their lenders</b>, with more than $1 trillion in
commercial real estate loans set to mature by the end of next year.</p>
<p>“The increase in rates impacts both the valuation and the cost of
debt, and this resulted in a very significant drop in transactional
volumes on a global scale,” Palladitcheff said, referring to the broader
real estate market. <b>“They have been halved in Europe, halved in the
United States, even an 80 per cent drop in transactions in Germany, for
example.</b>”</p></blockquote><p></p><p></p><p><span class="field field--name-title field--type-string field--label-hidden">Ms.
Palladitcheff has done wonders repositioning that portfolio,
diversifying out of retail into logistics and multifamily but offices
remain a problem.</span></p><p><b><span class="field field--name-title field--type-string field--label-hidden">Also, as she correctly points out, the </span>increase in rates impacts both the valuation and the cost of
debt, and this resulted in a very significant drop in transactional
volumes on a global scale.</b></p><p>Given the global backdrop in real
estate and the lagged performance relative to publicly-traded REITs, I
wasn't surprised Real Estate recorded a -6.2% return for
one year, above its index (-10%).</p><p>This has nothing to do with Nathalie Palladitcheff and her team at Ivanhoe Cambridge, <b>all of Canada's major pension funds are going to post losses in their respective real estate portfolios in 2023</b> and I'll be calling out anyone who doesn't mark down assets.</p><p>The good news, or somewhat good news, it wasn't as bad as I feared.</p><p>Recall my recent post on what <a href="http://pensionpulse.blogspot.com/2024/01/what-do-norways-2023-fund-results-mean.html" target="_blank">Norway's 2023 Fund results mean for Canadian pensions</a> where I noted:<br /></p><blockquote><p></p></blockquote><blockquote><blockquote><p>Total real estate investments <b>returned -2.0 percent for the first half and amounted to 3.9 percent of the fund at the end of the period</b>. Unlisted and listed real estate investments are managed under a combined strategy for real estate.</p><p>Unlisted
real estate investments made up 58.4 percent of the overall real estate
portfolio and returned -4.6 percent, while investments in listed real
estate returned 1.7 percent. </p><p><b>The main driver behind the
negative return on unlisted real estate was the office sector, with US
investments in particular falling sharply in value during the period</b>.
This was due mainly to increased vacancy, which means reduced income
for investors. The return on the listed portfolio was also affected by
the negative performance in the US office sector. </p></blockquote><p></p><p>Why is this important?</p><p>Because as at the end of June, unlisted real estate was down 2% and at year-end, <b>it was down 12%</b>.</p><p>That
tells me the Fund's appraisers significantly marked down unlisted real
estate assets in the second half of the year as it became evident office
vacancies weren't getting better and other sectors also faced
challenges as rates hit financing (multifamily).</p><p><b>Importantly,
if Norway's Fund is posting -12% in unlisted real estate, it doesn't
portend well for the unlisted real estate portfolio at Canada's large
pension funds (to be fair, I suspect Norway's Fund has a bit more
exposure to offices but can't confirm this).</b></p><p>There were dramatic markdowns of unlisted real estate assets <b>in the second half of the year</b> and this is worth noting as Canada's large pension funds prepare to report their results.</p><p>I've already told people last week when I covered why <a href="http://pensionpulse.blogspot.com/2024/01/cdpq-to-integrate-its-real-estate.html" target="_blank">CDPQ is integrating its real estate subsidiaries</a>
that I expect a challenging time in real estate as assets were marked
down to reflect the clobbering publicly traded REITs took in 2022.</p></blockquote><p></p><p></p><p><span class="field field--name-title field--type-string field--label-hidden">Why
was Norway's unlisted real estate portfolio down 12% whereas CDPQ's
real estate portfolio was down half that amount last year?</span></p><p><span class="field field--name-title field--type-string field--label-hidden"><b>The
answer is simple, Norway's unlisted real estate portfolio is made up
almost exclusively of office properties which got hit hard last year
(they are diversifying their unlisted real estate portfolio by sector
and geography but given their enormous size, it takes time).</b></span></p><p><span class="field field--name-title field--type-string field--label-hidden">So, this just proves the repositioning that </span>Nathalie
Palladitcheff and her team have accomplished at Ivanhoe Cambridge is
working and that's why they're beating their benchmark, adding
$5.5 billion in value
added over their benchmark.</p>As far as CDPQ integrating its real estate subsidiaries, I posted a comprehensive post with my thoughts <a href="http://pensionpulse.blogspot.com/2024/01/cdpq-to-integrate-its-real-estate.html" target="_blank">here</a>. </blockquote><p></p><p>Pretty much every Canadian pension fund I covered so far posted negative returns in real estate and that doesn't surprise me one bit because interest rates rose and there were some serious writedowns in some assets.</p><p>What did surprise me is weakness in real estate was across the board, including logistics and multifamily which have been on fire over the last five+ years.</p><p>It's fair to conclude real estate is an asset class with strong challenges in some sectors but also strong opportunities as this new normal works itself out.</p><p>Lone Star's John Grayken once noted in real estate, there's always value as investors own the land and he's right. </p><p>Another real estate titan, Blackstone's Jon Gray, recently noted they see value in real estate as the Fed begins lowering rates.</p><p>I'm not sure if the Fed is going to lower rates as much as the market expects unless all hell breaks loose in markets and it panics and slashes rates.</p><p>The biggest worry right now for many large investors I speak with is what happens if inflation expectations pick up and we enter a stagflationary period like the 70s.</p><p>That will not bode well for bonds, real estate, infrastructure and private equity.</p><p>Anyway, maybe I will try squeezing one last interview with Nathalie Palladitcheff as I did enjoy our discussions in the past.</p><p>Apart from repositioning that massive real estate portfolio, Ivanhoé Cambridge was also a leader in sustainable investing and did wonders on that front. More than anything, that is her lasting legacy at CDPQ and they should all be proud of that work which continues.</p><p>Below, the LeFrak Organization CEO Richard LeFrak joins 'Squawk Box' to discuss the state of the commercial real estate market, the stressors facing the sector, and more.</p><p>Next, Gil Borok, Colliers US CEO, joins 'The Exchange' to discuss the health of commercial real estate investments in 2024, office real estate since the Covid-19 pandemic, and more.</p><p>Third, Komal Sri-Kumar, president of Sri-Kumar Global Strategies, joins 'Squawk Box' to discuss the latest market trends, the looming commercial real estate crisis, impact on the Fed's rate path outlook, and more.</p><p>Fourth, Bill Rudin, Rudin Management CEO, joins 'Squawk on the Street' to discuss whether the Federal Reserve should be worried about commercial real estate, his outlook for the real estate sector, and more.</p><p>Lastly, Jonathan Gray, Blackstone president and COO, talks about where opportunities are in the real estate sector, the impact of interest rates, managing risk and the environment for fundraising. He speaks to Bloomberg's Francine Lacqua in Rome, where he is attending the Bank of America Global Investor Summit conference. </p><p>No doubt in my mind, Blackstone and others will be busy refinancing properties and picking up distressed loans and properties as opportunities arise. The problem again is navigating the unknowable, especially if a stagflationary environment sets in. <br /></p><p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/In1FhHDJpE4?si=TuNwkw57hw2qa7nJ" title="YouTube video player" width="640"></iframe></p><p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/Mhgnz2W5BNY?si=e8jeGqYUaFm2WKk1" title="YouTube video player" width="640"></iframe></p><p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/xiaB5BfIX3M?si=vu1uE9HIHih9nU3n" title="YouTube video player" width="640"></iframe></p><p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/2TsflmwmAss?si=bHI158_1Z8IZTvu4" title="YouTube video player" width="640"></iframe></p><p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/r-VC0xvI464?si=J3fIiUVwcrPyRrwg" title="YouTube video player" width="640"></iframe></p><p></p>Leo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.com0tag:blogger.com,1999:blog-5879608286191780679.post-80157773786643996822024-03-15T17:19:00.010-04:002024-03-16T08:33:26.723-04:00Don't Meddle with Canada’s Pension-Plan Model<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhVd1bIQCW9cgO3oU3lf2lxv_JU_zGIvc6bHYsmrJhcIQvGuqUWQHhZ4RmHcyU0_U9jaHEoJJKvexjmEwAP3sHFW9dL3exIeIzI2mKFRHsDO0pTaVcUTAEQFlEM0tlJSU4EaDrQFVG2nV0qLJ9Pl8EC-1jV9Je7PnoZzJQSWuX37lkke50u805RxfD_zkiq/s512/Do%20not%20meddle%20Canada%20pension%20model.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="400" data-original-width="512" height="313" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhVd1bIQCW9cgO3oU3lf2lxv_JU_zGIvc6bHYsmrJhcIQvGuqUWQHhZ4RmHcyU0_U9jaHEoJJKvexjmEwAP3sHFW9dL3exIeIzI2mKFRHsDO0pTaVcUTAEQFlEM0tlJSU4EaDrQFVG2nV0qLJ9Pl8EC-1jV9Je7PnoZzJQSWuX37lkke50u805RxfD_zkiq/w400-h313/Do%20not%20meddle%20Canada%20pension%20model.jpg" width="400" /></a></div>Earlier this week, seven former pension heavyweights came together to write an <a href="https://www.theglobeandmail.com/business/commentary/article-dont-meddle-with-canadas-pension-plan-model/" target="_blank">op-ed for the Globe and Mail</a> pleading governments here not to meddle with Canada’s pension-plan model:<p></p><p class="gmail-c-article-body__text gmail-text-pr-5"></p><blockquote><p class="gmail-c-article-body__text gmail-text-pr-5">What is the purpose of a pension plan?</p><p class="gmail-c-article-body__text gmail-text-pr-5">That’s
a strange question to ask in this country, where we have spent nearly
three decades building a Canadian pension model that is respected and
coveted around the world.</p><p class="gmail-c-article-body__text gmail-text-pr-5">Yet,
more than 90 Canadian business executives recently signed an open
letter calling for governments to make re-evaluating that pension model
“a national priority,” with a focus on introducing unclear mandates not
related to financial returns.</p><p class="gmail-c-article-body__text gmail-text-pr-5">So,
we must start at the beginning. Put simply, the purpose of a pension
plan is to help secure the financial future for Canadian workers by
delivering promised pension benefits at a reasonable cost.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>Those
benefits come from two sources. First, hard-working Canadians and their
employers spend decades contributing to pension plans with the promise
of financial security in retirement.
The second, and far larger piece, comes as pension plans help keep that
promise by generating required investment returns. Approximately 80 per
cent of the pension payments made to retirees flow from investment
returns.</b></p><div class="gmail-BaseAd__StyledRootBaseAd-sc-1khlkqq-1 gmail-l-media"><div class="gmail-c-ad gmail-c-ad--inline gmail-c-ad--oneX4" id="gmail-c-ad--oneX4-gpt-0"><div class="gmail-c-ad__wrapper"><div class="gmail-c-ad__image" id="gmail-oneX4-gpt-0"></div></div></div></div><p class="gmail-c-article-body__text gmail-text-pr-5">And
that’s where the simplicity ends. Investing for generations is a
challenge that requires navigating uncertain markets and operational
complexity. <b>Any added constraints imposed, including such new suggested
requirements, only exacerbate these challenges</b>. Portfolios become less
efficient, risks increase, investment returns are threatened, and future
pensions are put at risk.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>Right
now, Canada leads the world in pension investing. Despite being only
the 38th-largest country by population, Canada has the third-largest
share of pension wealth. Among the reasons for that success is the
pursuit of investment returns and an absence of political interference.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>Our
pension plans’ governance models also afford them clear mandates and
board directors who uphold leading governance practices. This commercial
focus is a compelling advantage. And, consequently, we have very
well-funded pension plans.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5">We
can see how extraordinary this result is by looking at other
jurisdictions. South of the border, many pension plans and state pension
systems are underfunded. In fact, cities have declared bankruptcy
because their pension plans were in crisis, thus depriving their workers
of their retirement savings.</p><p class="gmail-c-article-body__text gmail-text-pr-5">Moreover,
the most direct U.S. equivalent of the Canada Pension Plan, social
security, is on a path to financial difficulty within a decade.
Meanwhile, the CPP and other Canadian plans are well-funded.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>It’s
easy to forget that Canada once faced similar struggles. In the 1990s,
growing concerns about the solvency of our plans gave way to a series of
reforms and the “Canadian model” of pension investing was born.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5">This
solution did not come at the expense of Canadian economic growth and
development. On the contrary, by reducing pension expenses and long-term
costs of providing retirement security, we contributed to Canadian
competitiveness.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>All our
well-known Maple funds invest heavily in Canada – at least 10 per cent
of their portfolios are invested here, with several closer to 30 per
cent or even more. They are already entwined in support for the Canadian
economy, not only as owners of publicly traded stocks, but also of real estate, infrastructure and private businesses. They fund corporate and government debt across the country.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>More
compelling opportunities at home would be welcome, should the business
climate, policy certainty, taxes and other investment factors strike the
right balance of risk and return.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5">Yet,
the Maple funds don’t put all their eggs in one basket. Seeking
diversified assets globally helps protect members from the demographic
and economic factors that affect the financial sustainability of their
plans. Changes to Canadian population age, employment, immigration and earnings growth all contribute risks that can be mitigated by investing in different economies.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>Focusing
too much on Canada, to the exclusion of other compelling investment
opportunities, would be a step backward. It would jeopardize the
sustainability of our pension plans and cost plan members in uncaptured
growth and lost access to unique industries or currency advantages
available elsewhere. For example, the average annual return for the
S&P 500 over the past ten years has been about 14 per cent, while
the TSX 60 has returned about 7 per cent, in Canadian dollar terms.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5">The
Canadian pension model already requires investment income earned abroad
to flow back to Canada in the form of benefits to plan members. This is
the same approach that many individuals seek to replicate with their
own RRSPs or TFSAs, with similar benefits. Forcing pension plans to
invest more member contributions in Canada is essentially the same as
forcing Canadians to invest their personal savings here.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>Instead of looking to Canadians’ savings, governments have other tools at their disposal to seek diverse public-policy goals</b>.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>Unintended
harm is much more likely when policy instruments designed for separate
and distinct objectives (e.g., the safety and soundness of pension plans
vs. general regional economic development or corporate subsidies) are
confounded and implemented without accountability to government for
outcomes – good or bad.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>Our globally envied, made-in-Canada retirement security system was built by millions of Canadians. It works.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>There
is no reason to sacrifice this in pursuit of unsubstantiated benefits
that would come at a cost to pension-plan members. Canadian pension
plans are already serving their purpose</b></p><p>*** </p><p class="gmail-c-article-body__text gmail-text-pr-5"><i>Robert Bertram is a former chief investment officer of Ontario Teachers’ Pension Plan.</i></p><p class="gmail-c-article-body__text gmail-text-pr-5"><i>David Denison is a former chief executive of Canada Pension Plan Investment Board.</i></p><p class="gmail-c-article-body__text gmail-text-pr-5"><i>Jim Keohane is a former CEO of Healthcare of Ontario Pension Plan.</i></p><p class="gmail-c-article-body__text gmail-text-pr-5"><i>Claude Lamoureux, Jim Leech and Ron Mock are former CEOs of Ontario Teachers’ Pension Plan.</i> <br /></p></blockquote><blockquote><p class="gmail-c-article-body__text gmail-text-pr-5"><i>Mark Wiseman is a former CEO of Canada Pension Plan Investment Board.</i></p></blockquote><p>This is a short and insightful op-ed from experienced pension managers which hits all the right notes and the message is very simple: don't tamper with a successful model which has been proven to work over the long term and will ensure future generations can rely on their pension benefits when they retire.</p><p>I cannot overemphasize this point in the comment above:</p><p></p><blockquote>Unintended
harm is much more likely when policy instruments designed for separate
and distinct objectives (e.g., the safety and soundness of pension plans
vs. general regional economic development or corporate subsidies) are
confounded and implemented without accountability to government for
outcomes – good or bad.</blockquote><p></p><p>The older I get, the more cynical I become and appreciate Milton Friedman's message on why governments shouldn't meddle with the economy, most of the time they bungle it up!</p><p>Last week, I wrote my own thoughts on why the federal government <a href="http://pensionpulse.blogspot.com/2024/03/leave-canadas-pension-funds-alone-focus.html" target="_blank">should leave Canada's pensions alone and focus its attention elsewhere</a>.</p><p>I was very explicit and blunt, the federal government should only focus on creating winning conditions to attract foreign and domestic investments. </p><p>And in my opinion, the most important thing it can do is start privatizing infrastructure assets like airports, toll roads, ports and other assets.</p><p>Canada's infrastructure is decaying, we desperately need private investments and that will create jobs and help our large pensions pay benefits over the long run.</p><p>I'm actually surprised the CEOs of the Maple Eight and other large Canadian pensions aren't getting together demanding this policy shift from the federal and provincial governments.</p><p>The situation is dire. Earlier this week, my former colleague Stefane Marion, Chief Economist and Strategist at the National Bank, wrote an excellent comment on why <a href="https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/etude-speciale/special-report_240311.pdf" target="_blank">Canada's only way out is to attract more private investment</a>.</p><p>We have a huge productivity problem in this country and we are not addressing it. Worse still, government policies on immigration, housing and taxation are exacerbating this problem.</p><p>The end result? Nobody wants to invest in Canada and without that much needed investment, we risk falling further behind the United States in terms of productivity and this will permanently jeopardize our standard of living.</p><p>Canada's mighty pensions can help at the margin, especially if the federal government privatizes assets, but we need a hell of a lot more if we are to rectify this ongoing problem.</p><p>The truth is the United States is so far ahead of Canada, Australia, Europe, and even Asia when it comes to productivity gains that it's no wonder the Nasdaq attracts huge global capital flows.</p><p>Let me just end it on this note.</p><p>A friend of mine in Greece reminded me what a disaster it was when SYRIZA forced Greek pensions to invest more of their assets in the domestic economy.</p><p>Is that the course of action Canada wants to follow? </p><p>Let's stop talking nonsense. I have no qualms on transparency, accountability and forcing Canada's large pension funds to disclose more. In fact, I will write a comment on how we can significantly improve the governance at these pensions (<b>yes, there's room for improvement, never mind what you think</b>).</p><p>But I cannot sit idly by and watch the federal government make stupid decisions, threatening the Canadian pension model which is working exceptionally well even if it's far from perfect.</p><p>That's all from me, had a very busy week covering the results at OTPP, HOOPP and OPTrust and trading US biotech stocks that are volatile and kept me active all week (I should write a book on trading biotechs before I have a heart attack).<br /></p><p>Below, <span class="yt-core-attributed-string yt-core-attributed-string--white-space-pre-wrap" role="text"><span class="yt-core-attributed-string--link-inherit-color" style="color: #131313;">Canada’s largest pensions have gained a global reputation by investing billions in real assets such as infrastructure and real estate. This has attracted attention back home. Meet the Maple 8.</span></span></p><p><span class="yt-core-attributed-string yt-core-attributed-string--white-space-pre-wrap" role="text"><span class="yt-core-attributed-string--link-inherit-color" style="color: #131313;"><b>Update: </b>Sebastien Betermier shared a <a href="https://www.theglobeandmail.com/business/commentary/article-the-business-of-pension-funds-is-to-serve-beneficiaries-not-boost-the/" target="_blank">Globe and Mail op-ed</a> he wrote with Keith Ambachtshteer on why the </span></span>business of pension funds is to serve beneficiaries – not boost the economy. I note the conclusion which echos my thoughts above:</p><p></p><blockquote>The
question we should ask ourselves is not whether Canadian pension funds
invest enough in Canada, <b>but instead how we can make Canadian assets
more appealing to investors</b>. Reducing the barriers to investing in
Canada will unlock capital not only from our own pension funds but also
from a much larger pool of international investors.</blockquote><p></p><p>Take the time to read their full comment <a href="https://www.theglobeandmail.com/business/commentary/article-the-business-of-pension-funds-is-to-serve-beneficiaries-not-boost-the/" target="_blank">here</a>.<br /></p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/vrEqfp4wt0Q?si=lG03O6dG3oP9-pVh" title="YouTube video player" width="640"></iframe>Leo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.com0tag:blogger.com,1999:blog-5879608286191780679.post-36872501303607940952024-03-14T21:54:00.014-04:002024-03-15T13:15:19.386-04:00OPTrust Returns 5.3% in 2023<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi05e3rMN3buHp5ocOyJQJBiOucfAqzcqFVNNU0f2Jxav1OVgUmSfMmLacBnxDONHgwL14_2nAy-96by86KTOq-z50bDgDdUxaasqfFonXWPEAbP_FSMGgnrtQZDRj60dVVfd-xvkVO_Pg61B5hES_SkKcrFx9igcI38UKXD7gmWdHywI-Zzar4Gqu7OC7L/s1305/OPTrust%202023%20Highlights.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="481" data-original-width="1305" height="237" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi05e3rMN3buHp5ocOyJQJBiOucfAqzcqFVNNU0f2Jxav1OVgUmSfMmLacBnxDONHgwL14_2nAy-96by86KTOq-z50bDgDdUxaasqfFonXWPEAbP_FSMGgnrtQZDRj60dVVfd-xvkVO_Pg61B5hES_SkKcrFx9igcI38UKXD7gmWdHywI-Zzar4Gqu7OC7L/w640-h237/OPTrust%202023%20Highlights.jpg" width="640" /></a></div>Benefits Canada <a href="https://www.benefitscanada.com/news/bencan/optrust-returns-5-3-in-2023-marks-15-consecutive-years-at-100-funded-status/" target="_blank">reports</a> OPTrust returns 5.3% in 2023, marks 15 consecutive years at 100% funded status: <br /><p></p><div class="row"><div class="col-md-12"><p></p><blockquote><p>The OPSEU Pension Trust returned 5.3 per cent for 2023, according to its latest year-end report.</p><p>It
found, as of Dec. 31, 2023, the plan’s net assets stood at $25 billion,
up from $24.64 billion in 2022. It also reported a funded status of 100
per cent, marking 15 consecutive years at a fully funded status.</p><p><b>Public equities (16.6 per cent), credit (12 per cent), private equity
(8.7 per cent), multi-strategy investments (seven per cent) and
commodities (negative 2.7 per cent) all generated higher returns than in
2022 (up from negative 17.6 per cent, negative 3.5 per cent, 4.8 per
cent, negative 1.4 per cent and negative 7.1 per cent, respectively).
The report noted the return from equities was attributable to exposure
in technology-themed stocks, which recovered from a deep negative return
in 2022.</b></p><p><b>Conversely, returns from infrastructure (2.7 per cent)
and real estate (negative 1.9 per cent) decreased from 2022 (21.1 per
cent and 15 per cent, respectively).</b></p><p>“Against a backdrop of
volatile markets, global conflict and an affordability crisis, stability
and security are more important than ever,” said Peter Lindley,
president and chief executive officer at the OPTrust, in a press
release. “By striving to construct a portfolio that is resilient to a
variety of economic environments, we remain focused on the long-term and
in a strong position to pay pensions today and decades into the
future.”</p></blockquote><p></p></div></div><p></p><p>On Tuesday, OPTrust released its results stating it is fully funded for 15th consecutive year:</p><p></p><blockquote><p>OPTrust today released its <a href="https://optrust.com/fundedstatusreport/2023/index.html?utm_source=web&utm_medium=media+release&utm_campaign=2023+fsr" target="_blank">2023 Funded Status Report, <i>People. Purpose. Pensions.</i></a>, which details the Plan's financial results and funded status. In 2023, OPTrust remained fully funded for the 15<sup>th</sup>
consecutive year and <b>achieved a net investment return of 5.3 per cent</b>.
Over the past 10 years, the Plan's average net investment return is 7.2
per cent.
</p><blockquote style="margin-bottom: 25px; margin-top: 35px;">
<p><b>"At OPTrust, we have a clear purpose – to deliver peace of mind
in retirement to our members," said Peter Lindley, President and CEO of
OPTrust. "For the 15<sup>th</sup> consecutive year, OPTrust is fully funded, and the people we serve can continue to rely on a secure, sustainable pension."</b></p>
</blockquote>
<p style="margin-bottom: 25px;"><b>For OPTrust members, investment returns
account for more than 70 per cent of the benefits they receive in
retirement</b>, with more than $1.3 billion in entitlements paid in 2023,
benefiting communities across Ontario. OPTrust's Member-Driven Investing
(MDI) strategy is designed to deliver the total return needed to keep
the Plan sustainable over the long term, without taking excessive risk.
OPTrust's average annual net investment return since inception is 7.9
per cent.</p>
<blockquote style="margin-bottom: 45px; margin-top: 35px;">
<p><b>"Against a backdrop of volatile markets, global conflict, and an
affordability crisis, stability and security are more important than
ever,” said Lindley. "By striving to construct a portfolio that is
resilient to a variety of economic environments, we remain focused on
the long term and in a strong position to pay pensions today and decades
into the future."</b></p>
</blockquote>
<p style="margin-bottom: 25px;"><b>OPTrust's annual Responsible Investing
Report has once again been integrated into the Funded Status Report</b>. In
2023, OPTrust made significant progress implementing its enhanced
climate change strategy, <b>including calculating the first Total Portfolio
carbon footprint, and announcing an interim portfolio decarbonization
target of 30 per cent by 2030 in support of achieving a net-zero
portfolio by 2050</b>.</p>
<blockquote style="margin-bottom: 45px; margin-top: 35px;">
<p><b>"OPTrust's climate change strategy is designed with one purpose
in mind: to protect our pension promise over the long term," said
Lindley. “With a recognition of the increasing urgency to act on
sustainability issues, we are taking steps today to protect our members'
pension security through a transitioning global economy."</b></p>
</blockquote>
<p style="margin-bottom: 25px;"><b>In 2023, OPTrust welcomed five
additional nonprofit organizations and nearly 1,000 new members to reach
a total membership of over 4,200 in OPTrust Select.</b> OPTrust also
continued to provide an exceptional service experience to members who
rated their service satisfaction as 8.7 out of 10. OPTrust was
recognized among the top 10 pension plans for service by CEM
Benchmarking Inc.'s global rankings.</p>
<p style="margin-bottom: 25px;">OPTrust maintained the discount rate at
3.0 per cent, net of inflation. Additional information about OPTrust's
2023 strategy and results is available in <a href="https://optrust.com/fundedstatusreport/2023/index.html?utm_source=web&utm_medium=media+release&utm_campaign=2023+fsr" target="_blank"><i>People. Purpose. Pensions.</i></a> at optrust.com.</p>
<h6 class="mark-color"><b><span style="font-size: medium;">ABOUT OPTRUST</span></b></h6>
<p style="margin-bottom: 35px;">With net assets of $25 billion, OPTrust
invests and manages one of Canada's largest pension funds and
administers the OPSEU Pension Plan (including OPTrust Select), a defined
benefit plan with over 111,000 members. OPTrust was established to give
plan members and the Government of Ontario an equal voice in the
administration of the Plan and the investment of its assets through
joint trusteeship. OPTrust is governed by a 10-member Board of Trustees,
five of whom are appointed by OPSEU and five by the Government of
Ontario.</p></blockquote><p>Please take the time to read OPTrust's 2023 Funded Status Report <a href="https://optrust.com/fundedstatusreport/2023/documents/2023-funded-status-report.pdf" target="_blank">here</a>.</p><p>Earlier today, I discussed this report with CIO James Davis and want to thank him for taking the time to talk to me. I also want to thank Jason White for setting up the call and sending me the material beforehand.</p><p>Before I get to my interesting discussion with James, let me go over some items.</p><p>First, take the time to read the message from Chair Lindsey Burseze and Vice-Chair Richard Nesbitt:</p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjp6JS9TKyqg5PmOWnkSGERTQpwFAT5Z4NBxKv3Hdy3ymYq6U8yD9og4mAE5nN4m0VaWCp2v2HaRlINmMBuck02_ANsc9GmuVhgqwykbp1VG4jswxqWNJKN9ZzAVa4LA-SKggs5GqZ0whlmaCnuKdk7GISMSWaArYSjLQ02WY0g-oA9nXyUNoo9ccypklMZ/s861/OPTrust%20Chairs1.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="708" data-original-width="861" height="526" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjp6JS9TKyqg5PmOWnkSGERTQpwFAT5Z4NBxKv3Hdy3ymYq6U8yD9og4mAE5nN4m0VaWCp2v2HaRlINmMBuck02_ANsc9GmuVhgqwykbp1VG4jswxqWNJKN9ZzAVa4LA-SKggs5GqZ0whlmaCnuKdk7GISMSWaArYSjLQ02WY0g-oA9nXyUNoo9ccypklMZ/w640-h526/OPTrust%20Chairs1.jpg" width="640" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgclffMMqMShuE1f2r-pgZyy9dTMIz2ghYPgTZE_T0aUq2QlCOcWrGuxZBrPeUYAnihit7NeVtGdHDpz5JzJd3qy0nrvevTE0Fg3syRR4tKghwKvHCmse8D9-9tnf6pdIGYqeAfNvGKonv1RRrmmzZ52h_o70o0p-wAnLxnU6XFVHD9icLW-6WIgAwHQs0R/s837/OPTrust%20Chairs2.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="547" data-original-width="837" height="418" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgclffMMqMShuE1f2r-pgZyy9dTMIz2ghYPgTZE_T0aUq2QlCOcWrGuxZBrPeUYAnihit7NeVtGdHDpz5JzJd3qy0nrvevTE0Fg3syRR4tKghwKvHCmse8D9-9tnf6pdIGYqeAfNvGKonv1RRrmmzZ52h_o70o0p-wAnLxnU6XFVHD9icLW-6WIgAwHQs0R/w640-h418/OPTrust%20Chairs2.jpg" width="640" /></a></div>Next, take a minute to read CEO Peter Lindley's message:<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJzKH6wj-CGnvf43E981zuZTHfveaqsNoj5Qq3oNrq1YCtbpMjuCBv9-sYUG4EmiHTNdbH0K54Bp3Rxh60wrbbe6vx3hwgz8xJawa1casiI-0wGTVC_7rP7TbRBOOcW2kK6kppF3q7fFHB_o4XKBCY-okYlSkpUAWboO9rGE28QbbkdVzY8NABH5t0K-PZ/s860/OPTrust%20CEO1.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="768" data-original-width="860" height="572" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJzKH6wj-CGnvf43E981zuZTHfveaqsNoj5Qq3oNrq1YCtbpMjuCBv9-sYUG4EmiHTNdbH0K54Bp3Rxh60wrbbe6vx3hwgz8xJawa1casiI-0wGTVC_7rP7TbRBOOcW2kK6kppF3q7fFHB_o4XKBCY-okYlSkpUAWboO9rGE28QbbkdVzY8NABH5t0K-PZ/w640-h572/OPTrust%20CEO1.jpg" width="640" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgQHLuR_a8TmUhpA5zbK6UR1jcl7xqrnHOvWowe9LEOTQmADtxgUje-bIwo3wGPX93bhq2fU5XLSUtJ_UFigV3qpMtYtXZr0uteHIvtNShuuHz68UTKJ1LM84GqgWjLIgTGSRNCmZwaGqZP1e3wRc4kyYcxjPF-H1JrtqAqerQd2rMUC-BGlzJE5npmJnT_/s848/OPTrust%20CEO2.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="588" data-original-width="848" height="444" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgQHLuR_a8TmUhpA5zbK6UR1jcl7xqrnHOvWowe9LEOTQmADtxgUje-bIwo3wGPX93bhq2fU5XLSUtJ_UFigV3qpMtYtXZr0uteHIvtNShuuHz68UTKJ1LM84GqgWjLIgTGSRNCmZwaGqZP1e3wRc4kyYcxjPF-H1JrtqAqerQd2rMUC-BGlzJE5npmJnT_/w640-h444/OPTrust%20CEO2.jpg" width="640" /></a></div><p>I note the following:<br /></p><p></p><blockquote><p><b>OPTrust’s climate change strategy is designed with one purpose in mind: to protect our pension promise over the long term. </b>In December 2023, we released a one-year update to our enhanced climate change strategy, detailing the progress we have made since 2022 and the goals we have set to strengthen the fund’s resiliency to climate change. Some of the highlights include launching an innovative Climate Metric Framework, calculating our first Total Portfolio carbon footprint, and setting a goal to reduce our carbon footprint by 30 per cent by 2030.</p><p><b>Recognizing environmental, social and governance factors are increasingly important for our members and stakeholders, we moved away from publishing a standalone annual Responsible Investing Report last year and integrated that content within our 2022 Funded Status Report. We are taking that same approach this year to ensure members and stakeholders can easily view our responsible investing activities and better understand how we are incorporating these considerations into our investments</b>.</p></blockquote><p>Personally, I prefer this approach than issuing the Responsible Investing Report at a different time, just issue it at the same time with your annual results but I would have liked a video presentation on this going over highlights (I should consult pensions on how to improve transparency and communications).</p><p>In terms of the Plan's funding, I note the following:</p><p></p><blockquote><p>Under OPTrust Select, on an annual basis <b>at the discretion of the Board,</b> pensions that are being paid may be granted COLA, and active members may be granted accrued benefit upgrades to adjust for inflation.</p><p>The investment environment is more uncertain than normal due to monetary policy tightening, geopolitical risk events, and changes in fiscal policy impacting economic growth and asset pricing in unpredictable ways which can put pressure on the Plan’s funded status.</p><p><b>The demographics of the Plan are challenging because the proportion of inactive members relative to active contributing members remains high</b>. <b>This situation means funding risk is borne by a smaller group of contributing members, which constrains the amount of investment risk the Plan can bear.</b></p><p>There are several methods to help maintain the funded status: <b>our Member-Driven Investing (MDI) strategy, the risk tolerance specified in our Risk Appetite Statement and our funding tools</b>. As Plan challenges continue, the tools at our disposal are applied differently over time. This includes the way we use risk within the MDI strategy. Plan sustainability is directly influenced by how we manage challenges and the amount of risk we are willing to assume. <b>For instance, the discount rate includes a margin to protect the Plan from future adverse events</b>. <b>The margin in our discount rate remains strong at the end of 2023. Yield levels remain higher than during the pandemic, which has reduced the downward pressure on the discount rate used to value the Plan’s obligations</b>.</p><p>We try to foresee upcoming challenges that could potentially affect the Plan’s sustainability. <b>We perform projections under varying economic environments, such as high inflation and low economic growth, or market collapses and rebounds, to help prepare for outcomes that may affect the level of future contributions and/or benefits</b>.</p></blockquote><p></p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhAmm9YB-3faalIRhhfnlZ94CS9oWsc8FItMF6deNIz2jyrxSij3NnzAy0ONwVcz_agzfEWJHlPxg1-kA6ZBfWPxVyc56HllDJoII9UO9O1Vd3Iv8LKRjF_q973ctgG4qSjKG0J-SJXdBy5_NSbjLgyX1gAc22Z3dO1wldoK-pUqorR7uCYvikyFpcyzq8o/s801/OPTrust%20Funding%202023.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="637" data-original-width="801" height="508" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhAmm9YB-3faalIRhhfnlZ94CS9oWsc8FItMF6deNIz2jyrxSij3NnzAy0ONwVcz_agzfEWJHlPxg1-kA6ZBfWPxVyc56HllDJoII9UO9O1Vd3Iv8LKRjF_q973ctgG4qSjKG0J-SJXdBy5_NSbjLgyX1gAc22Z3dO1wldoK-pUqorR7uCYvikyFpcyzq8o/w640-h508/OPTrust%20Funding%202023.jpg" width="640" /></a></div>I would also recommend you read the 2023 Responsible Investing Report embedded in the Funded Status Report and I note the following on climate strategy which I discussed briefly with James:<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgGkHbPtbpNcVF_g1DpPyxpLQX-V6zQOmtto23pKh-jFiPLRuT-EinrWC02IyLwGaN1oHsc4CLuVCs5ofi9G9JKcCmTW72jLkZ_dJYsmHgK8sk0rgMt9W35hRwLRa_14nMEqTsxoF_7p4MF1Xg7Ukd8lhnVU9Z3oH63OY7dLxAo0b0nXl7AGa_8kKPvRq0-/s830/OPTrust%20climate%20strategy.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="631" data-original-width="830" height="486" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgGkHbPtbpNcVF_g1DpPyxpLQX-V6zQOmtto23pKh-jFiPLRuT-EinrWC02IyLwGaN1oHsc4CLuVCs5ofi9G9JKcCmTW72jLkZ_dJYsmHgK8sk0rgMt9W35hRwLRa_14nMEqTsxoF_7p4MF1Xg7Ukd8lhnVU9Z3oH63OY7dLxAo0b0nXl7AGa_8kKPvRq0-/w640-h486/OPTrust%20climate%20strategy.jpg" width="640" /></a></div><p></p><p>Lastly, it is worth noting that OPTrust invests primarily in Canada (35%) and the United States (46%):<br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiC7zKzEF7ht6zVWrQ47dNtKVNU5jWzxRrM22OjHr2Llm5RdNsDrUrnvmDGwbxEXD7O3euRvZXhnCqM-6TP6cc7iWoGVsv9pqViGBgHEUHhbDB19UIE37wBqES7iqNnc_2h_dMAOl_T1y6rtL8GRAW4WkO5C9Ow5pLLWnG8wpM33Ucp_IK9S_3T-8wPsL-8/s868/OPTrust%20geographic%20breakdown.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="603" data-original-width="868" height="444" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiC7zKzEF7ht6zVWrQ47dNtKVNU5jWzxRrM22OjHr2Llm5RdNsDrUrnvmDGwbxEXD7O3euRvZXhnCqM-6TP6cc7iWoGVsv9pqViGBgHEUHhbDB19UIE37wBqES7iqNnc_2h_dMAOl_T1y6rtL8GRAW4WkO5C9Ow5pLLWnG8wpM33Ucp_IK9S_3T-8wPsL-8/w640-h444/OPTrust%20geographic%20breakdown.jpg" width="640" /></a></div><p></p><p>And like Maple Eight larger peers, the bulk of the investments (71%) are managed internally to make sure they keep costs low:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjOo0M75JCmsfkSrR3WH9XnDHbLfzJi-lBOxKV2y3IpL_McqaUBJ_Q7unBXcGWmQ-k336SBlw6K4dwRMlOHza499tiF104ZUXsprvWbjq502irfYBPQvTVG_kpLq_Yo01_fLo0cn74sCQv_P19C0EmlJgshSiVLkVRQMoVOhnsDV_JUfzhjR6Rulzxik6_R/s798/OPTrust%20internal%20investment-lower%20costs.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="605" data-original-width="798" height="486" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjOo0M75JCmsfkSrR3WH9XnDHbLfzJi-lBOxKV2y3IpL_McqaUBJ_Q7unBXcGWmQ-k336SBlw6K4dwRMlOHza499tiF104ZUXsprvWbjq502irfYBPQvTVG_kpLq_Yo01_fLo0cn74sCQv_P19C0EmlJgshSiVLkVRQMoVOhnsDV_JUfzhjR6Rulzxik6_R/w640-h486/OPTrust%20internal%20investment-lower%20costs.jpg" width="640" /></a></div><p></p><p>Alright, those are the preliminaries, let me get to my discussion with James.</p><p><b>Discussion With OPTrust CIO James Davis</b></p><p>Earlier this afternoon, I had a chance to discuss OPTrust's 2023 Funded Status Report with CIO James Davis.</p><p>James is a supper nice guy, a veteran who used to work in Barb Zvan's portfolio construction team at OTPP before joining OPTrust as CIO.</p><p>He knows Michael Wissell well and like Michael, he's very sharp and an independent thinker.</p><p>I began by asking him to give me an overview of OPTrust's results last year:</p><p></p><blockquote><p>Sure, the first thing I would tell you and you know this, our main benchmark, our north star, the one thing we focus most on is our funded status and we remain fully funded for 15 years in a row.</p><p>At the end of 2015, we put in place a new member driven investment strategy which is very focused on the funded status. We only take the risk we need to take to pay pensions, we are not looking to make outsized returns by taking unnecessary risks.</p><p>So that necessitates relatively strong bond exposure because we want to hedge some of these liabilities.</p><p><b>Our strategy in terms of value creation is focused more on private markets than it is on public markets</b>. That's somewhat uncharacteristic of the Canadian Model as many of our peers have more public equity exposure than we do. </p></blockquote><p></p><p>James told me total equities -- public and private -- made up 30% of the portfolio and their private equity exposure has increased through their MDI strategy over the last number of years (in 2015, they had a public equity allocation of roughly 30%, now it's 10-11% and the rest is PE).</p><p>He added:</p><p></p><blockquote>What this means is in a year like 2023 when public equities are doing very well, we are not going to have a strong return, but over the long run our value creation in private equity will work in our favor. So over the long term, we prefer to have more in private markets like infrastructure, real estate and private equity.</blockquote><p></p><p>I noted that right now, OPTrust and Teachers' have the lowest allocation to public equities (10%) and that is done purposely to mitigate downside risks (but you also miss upside risk like in 2023).</p><p>James also told me the approach in PE is still mid-market and they do not have venture in private equity noting this however:</p><p></p><blockquote><p>We do have a very small sleeve where we pursue smaller opportunities where we think there may be growth potential. If you look at our portfolio, you'll see something called "other" and we had quite a significant positive rate-of-return in 2023 but it's a very small allocation. There we will look at smaller opportunities that are venture or something in the climate space like climate tech or financial innovation. More recently, we did a very small deal in AI so we can learn more about that space.</p><p>So returns there are volatile, they were solid last year but the goal there is to gain exposure into things we otherwise wouldn't gain exposure to.</p><p>Our private equity portfolio is more conventional. It is mid-market and we do try to invest in sectors that are less economically sensitive and that has served us well over time. Sandra (Bosela) has done an amazing job and our longer term performance in private equity is quite spectacular. Looking at the 4-year period, PE has delivered over 18% annualized, so it's been a great contributor o the overall portfolio. </p><p>Infrastructure has been another great asset class, not as strong in 2023 because interest rates have gone higher, so the cost of capital has gone up and that asset class is not immune to that. So the strong performance we had in infrastructure over a 4-year period is over 13%. In 2023, it was 2.7% but if you look at 2021, our infrastructure portfolio delivered 33%.</p><p>So we know looking at any single year return of any asset class is meaningless, we focus on the longer term but the value creation opportunities in private equity, infrastructure and real estate are quite phenomenal.</p><p>I'll comment briefly on real estate because there we had a negative rate-of-return, -1.9%, but if you look at it over a 4-year period, it's 7.8%. And since inception in 2004, returns close to 9% per annum.</p></blockquote><p>Here I interjected noting the -1.9% in real estate last year is actually quite good relative to the larger peers which lost 6-8% in that asset class last year. I asked James is that due to sector diversification and he replied:</p><p></p><blockquote><p>The strategy for us is we try to stay in strong geographies where there are strong growth and income opportunities. <b>The other thing we have done -- and this is quite deliberate over the past several years, going back pre-Covid -- is to reduce our exposure to office and retail and grow our exposure into multi-residential and industrial</b>. We have about a half of market weight in the office sector but where are office buildings are, we are focusing on class A office buildings . </p><p>We also have a significant exposure to development real estate, that's an important part of our strategy. The cities we focus on -- Toronto, Vancouver, Seattle, San Jose and other areas in the West Coast US. We have exposure to other areas of Canada, of course, limited exposure to Europe. We are focused on big cities where there are high growth opportunities, focusing on high quality buildings.</p><p>Where there are challenges and you probably heard this from some of our peers is inflation is something you can hit with real estate but you have to think of that in the long run. <b>In the short run, it can be very problematic not only because it pushes interest rates higher which pushes cap rates higher but also on the development side of real estate, it costs you more to build a building because price of materials go up, the price of labor (wages) goes up, so that makes it more problematic.</b></p><p>And of course when you have an asset class that is in distress, it starts to snowball. So the one thing I can tell you is we have been actively refinancing properties. We did 15 mortgage renewals in this past year and all have been successful. We have more to do but we have not had any problems because the majority of our properties are in Canada, and we've got great relationships with those institutions that are financing us. That has made financing a lot easier for us but I know for some others, it hasn't been as smooth, financing has been more problematic.</p></blockquote><p></p><p>I then shifted my attention to private debt and asked James if they have a sleeve there. He replied:</p><p></p><blockquote><p>Good question, we do not have an allocation to private debt. The way I structured our portfolio, I want the deal teams in private markets to vet and invest across the capital stack. <b>So about 18% of our real estate exposure is in real estate debt. </b>We do have some exposure there and the team feels there are good opportunities in that space now.</p><p><b>But we don't have a core allocation to private credit like some of our peers do</b>. </p><p>We do have some exposure in our Credit sleeve which primarily all passive but we don't have an allocation to private debt and I would prefer the deal teams to do it on an opportunistic basis.</p></blockquote><p></p><p>I mentioned that while Michael Wissell remains somewhat constructive on private debt, Jo Taylor thinks we are at the mid to end stage of the cycle and returns gong forward will not be as good in private debt and credit in general. <br /></p><p>James told me "when everyone is talking about a new asset class -- and I've seen this in quite a few conferences where everyone is talking about private credit -- that's generally the time to start to worry."</p><p>I told him I completely agree and remember back in 2005, I attended a commodities conference in London where brokers from Goldman and Barclays were trying to persuade me that PSP should invest in commodities, and I ended up making the opposite recommendation thinking we were close to the top (we were).</p><p></p><p>We then discussed fixed income where I told him HOOPP CIO Michael Wissell told me they used volatility in bond markets last year to significantly increase their exposure to real return bonds (mostly TIPS). I asked James if they did the same thing:</p><p></p><blockquote><p>Short answer is no. Our liabilities are nominal although they are inflation indexed, but the way we do the discount rate, it's a nominal discount rate. So we hold nominal bonds to deal with interest rate sensitivities to plan liabilities but I look at inflation hedging more from my real estate and infrastructure portfolio. We also have a small allocation to comorbidities which is actively managed. We are looking at alternative ways in managing inflation exposure. It's obviously become something which is more front and center in the last few years.</p><p>I don't know if it will be problematic in the next few years but there's more potential now than a decade ago.We are looking at different ways to hedge inflation but we are not sure the mismatch between Canadian and US inflation and whether TIPS would be the best way to hedge inflation. We have held TIPS in the past but it's not a core part of our liability hedging portfolio.</p><p>That's not to say TIPS won't be part of our inflation hedge going forward, we are looking at this and inflation swaps to mitigate inflation exposure. <b>But what's most important to us is we do this in a cost effective way and keep our eye on the long term.</b> </p><p><b>What most concerns me about inflation isn't the impact on liabilities but the impact on assets. So, I want to make sure our assets are resilient to an inflationary environment. I do think in the long run, equities, especially private equity, infrastructure and real estate can give us that kind of hedging and also offer us value creation, and that's where I struggle with TIPS, I don't know how to create value with TIPS.</b></p></blockquote><p>I shifted the discussion to private equity where I noted the cost of financing and higher labor costs have hit margins and the returns of larger peers and asked him if absolute return strategies hedge against inflation. James replied:</p><p></p><blockquote><p>Again, we try to look at the portfolio in a holistic way, each sleeve, each line item has a specific purpose. I tend not to look at absolute return strategies as an inflation hedge and the reason is that the risk-free rate has gone up and that concerns me because if I'm looking at the performance of funds of funds, am I collecting a high enough risk premium over cash if the risk free is 5%?</p><p>So again, where do I get the best opportunities for value creation, it's in private equity. It's not just about the the asset class itself, it's how you run the businesses, how you select the sectors you want to be in. We do look for businesses where there are opportunities to pass through costs and recoup them in revenues so we get less margin compression. We found over the years the services sector tends to be the area we are most comfortable in and tends to have those characteristics, more than the manufacturing sector.</p><p><b>So if you look at our private equity portfolio, we are more focused on services than industrial or manufacturing. That has more of an inflation hedging characteristics.</b></p><p>But even public equities over the long run are a good long term hedge against inflation.</p><p>When I look at the portfolio over the long run, I think we are resilient. Our overall MDI strategy is all about resilience, it's about being able to weather any macroeconomic environment. <b>The most challenging one is a stagflationary one and that's what has been scary over the last few years</b>, it felt stagflationary. Hopefully that's behind us but it's a bit early to draw conclusions.</p></blockquote><p>Indeed, a sustained stagflationary environment like in the 70s, early 80s is the worst outcome for pensions but so is a severe and prolonged deflationary shock (think a decade of Covid). </p><p>The one good thing now is central banks have raised rates significantly and they are much more measured in cutting them, fearing a reemergence of inflation. <br /></p><p>James noted there's a lot of room to cut rates now which is a good thing because rates are high, "so if we do see an economic slowdown and inflation isn't a problem, they have the ammunition to significantly reduce the cost of capital." <br /></p><p>Lastly, James noted on their climate strategy, they have done significant work to measure emissions across public and private assets. He said they're really trying to understand the risks and opportunities of climate change and they put in place metrics to measure carbon exposure, working with their investment partners and portfolios companies to try to get more insight in private markets where they have a high exposure.</p><p>They are holding their private companies and partners to account and helping them understand their exposure to carbon and it's a work in progress but they are closer to achieving their interim goal of reducing their exposure by 30% by 2030.</p><p>They are also doing climate scenario analysis to measure the risks to their portfolio but at the end of the day, it's all about ensuring the Plan remains sustainable.</p><p>Finally, James wanted to give a shout-out to his "amazing team" and he's very proud of the leadership and culture which maintains and enhances the focus on a total portfolio approach which is instrumental to their MDI strategy. </p><p>Alright, these comments take forever to write, I need to figure out ways to upload my interviews on YouTube and save me a ton of time but writing them out helps me appreciate the nuances and different approaches at Canada's venerable pension plans and funds.</p><p>Also, as I customarily do, here is the executive compensation at OPTrust but private market officials are not there (they should be!!):</p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEil-K430wvOhtxg5IoGuNG80yU6YRqAORLkYoEPAUWWJ6oa6ha_MDPylMGrHCH_dr8Xi_k2ZetBV1kOT9D1nxcavUqGZxrMoPscOQrHYqEHF4djStdj_P3hfFFMxxdie_mJQ3Mr4bWyyzaSKWFLBAJQUfLmfFg9W7a1Mr99muQVw_F-L_Qx9dYxCob7d4Hy/s785/OPTrust%20exex%20compensation.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="606" data-original-width="785" height="494" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEil-K430wvOhtxg5IoGuNG80yU6YRqAORLkYoEPAUWWJ6oa6ha_MDPylMGrHCH_dr8Xi_k2ZetBV1kOT9D1nxcavUqGZxrMoPscOQrHYqEHF4djStdj_P3hfFFMxxdie_mJQ3Mr4bWyyzaSKWFLBAJQUfLmfFg9W7a1Mr99muQVw_F-L_Qx9dYxCob7d4Hy/w640-h494/OPTrust%20exex%20compensation.jpg" width="640" /></a></div><p></p><p>Below, former US Treasury Secretary and Liberty Strategic Capital founder and managing partner Steven Mnuchin joins 'Squawk Box' to discuss the latest developments around a potential TikTok ban, why he's putting together a group to buy the social media app, whether he believes the app poses a national security risk, his thoughts on entitlements, state of the US economy, and more.</p><p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/-9E3uJxA2mI?si=rOM0mNIq2LplVH-g" title="YouTube video player" width="640"></iframe></p><p></p>Leo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.com0tag:blogger.com,1999:blog-5879608286191780679.post-86614343835420657122024-03-13T21:09:00.009-04:002024-03-14T06:56:45.821-04:00HOOPP Gains 9.4% in 2023<p><span id="author"></span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiV4265ClkoJ9wOAQCKbU3t5hbW61DPsVzqGV7MBzbfKGr5-kO3VmGzmNIVmBa-VPeK5sbO18IF_F_t3JxxlFm2GMA8Fa7T5VPWdGokLnZGoq4G6lCDb8hd3GyNL_fU8gf_KN8xkBC3CjtJDxLfGcSZh7u9mt5o2bsL5SjpVmDJjFyNSaPS_YelN-xX38go/s882/HOOPP%202023%20highlights.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="577" data-original-width="882" height="261" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiV4265ClkoJ9wOAQCKbU3t5hbW61DPsVzqGV7MBzbfKGr5-kO3VmGzmNIVmBa-VPeK5sbO18IF_F_t3JxxlFm2GMA8Fa7T5VPWdGokLnZGoq4G6lCDb8hd3GyNL_fU8gf_KN8xkBC3CjtJDxLfGcSZh7u9mt5o2bsL5SjpVmDJjFyNSaPS_YelN-xX38go/w400-h261/HOOPP%202023%20highlights.jpg" width="400" /></a></div>Freschia Gonzales of Wealth Professional <a href="https://www.wealthprofessional.ca/news/industry-news/hoopp-achieves-938-return-in-2023/384480" target="_blank">reports</a> HOOPP achieves 9.38% return in 2023:<p></p><div class="wrapper wrapper--detail mb-30-30-20">
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<p></p></div></div><blockquote><div class="wrapper wrapper--detail mb-30-30-20"><div class="wrapper--detail__body"><p>The
Healthcare of Ontario Pension Plan (HOOPP) announced a return of 9.38
percent for the year 2023, increasing its net assets to $112.6bn from
$103.7bn at the end of 2022. </p>
<p><b>This
performance secures the Plan's funded status at 115 percent,
demonstrating its robust financial health by having $1.15 in assets for
every dollar owed in pensions. </b></p>
<p>Despite
the slight slowdown from 2022's growth, HOOPP achieved strong returns
across multiple asset classes including fixed income, public equities,
private equity, and private credit. </p>
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<p><b>The
investment team strategically increased exposure to bonds following a
rise in yields during the summer and fall, contributing significantly to
the Plan's performance as the bond and stock markets rallied towards
the end of the year. </b></p>
<p><b>“In
2023, there was considerable economic uncertainty resulting from
several factors, including increased geopolitical tension, persistent
inflationary pressures, and unsteady global growth,” said Jeff Wendling,
president, and CEO of HOOPP. “Amidst this volatility, HOOPP delivered
strong returns in support of our pension promise to the healthcare
workers of Ontario.” </b></p>
<p><b>The
Plan capitalized on market volatility by enhancing its investment in
real return bonds at attractive valuations, which protected the Fund
against inflation and generated value for the Plan. </b></p>
<p><b>By
the end of the year, inflation-indexed bonds constituted roughly half
of HOOPP’s targeted portfolio allocation to bonds, facilitating the
provision of a cost-of-living adjustment to retired members in 2024. </b> </p>
<p>A
significant contributor to the strong 2023 return was HOOPP's
substantial investment in Canada, with over $60bn of its assets within
the country. This investment spans real estate, including major
industrial and logistics parks, office towers, and housing, as well as
supporting Canadian innovation and entrepreneurship. </p>
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<p><b> Additionally,
HOOPP stands as one of the largest investors in Canadian bonds, which
make up about half of the Canadian portfolio. The proceeds from
government bond sales contribute to public services and infrastructure
essential to Canadians, such as hospitals, public transportation, and
schools. </b> </p>
<p><b>“Our
commitment to investing in Canada is strong. Canada is not only our
home but also a safe and stable country that offers attractive
investment opportunities,” stated Michael Wissell, Chief Investment
Officer at HOOPP. </b></p>
<p><b>He
further explained that the bond portfolio is central to HOOPP’s
Liability Driven Investing (LDI) strategy, mitigating the Plan's
liability sensitivity to interest rate and inflation changes, providing
government-guaranteed returns, supporting other investment activities,
and diversifying the Fund's assets</b>. </p>
<p><b>HOOPP
also highlighted its initiatives in 2023, including reinforcing its
commitment to sustainable investing with the launch of a climate change
strategy aimed at achieving net-zero portfolio emissions by 2050. </b></p>
<p>Additionally,
the Plan continued its research to improve retirement security outcomes
for Canadians and expanded its contribution to Ontario's healthcare
sector by increasing its employer and member base. </p>
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<p><b>Reflecting
on the year's achievements, Wendling expressed pride in the team's
accomplishments and reiterated the Plan's dedication to fulfilling its
pension promise to Ontario's healthcare workers, emphasizing the Plan's
continued strong funded status to ensure pension security. </b> </p>
<p>The
2023 performance by asset class revealed diverse returns, with public
equities and private equity showing significant gains, while real estate
recorded a decline. <br /></p></div></div></blockquote><p>Palash Gosh of Pensions & Investments also <a href="https://www.pionline.com/pension-funds/healthcare-ontario-pension-plan-notches-net-938-return-2023" target="_blank">reports</a> Healthcare of Ontario Pension Plan notches net 9.38% return in 2023:</p><p class="paragraph-newsletter-1" id="first-graph"></p><blockquote><p class="paragraph-newsletter-1" id="first-graph">Healthcare of Ontario Pension Plan, Toronto, returned a net 9.38% in 2023, below the benchmark return of 10.36%.</p>
<p class="paragraph-newsletter-2">Net assets totaled C$112.6 billion
($84.9 billion) at the end of 2023, up from C$103.7 billion at the end
of 2022, said a March 13 release.</p>
<p class="paragraph-newsletter-3"><b>Over the 10-year period and 20-year
periods, HOOPP delivered annualized net returns of 8.43% and 9.04%,
respectively, compared with benchmark figures of 6.1% and 7.09%,
according to the annual report.</b></p>
<p class="inline-ad-para paragraph-newsletter-4"><b>In calendar 2022, HOOPP returned a net -8.6%, compared with a benchmark figure of -13.21%</b></p><p class="paragraph-newsletter-5"><b>By asset class, the top performers for
2023 were private equity (up a net 15.9%), public equities (15.71%),
private credit (9.33%), infrastructure (8.17%), credit (4.55%) and fixed
income (4.28%). The poorest performer was real estate, which returned a
net -6.5%.</b></p>
<p class="paragraph-newsletter-6">HOOPP stated in the release that its
investment team "increased exposure to bonds after yields rose in the
summer and into the fall, contributing significantly to strong
performance" when bond and stock markets rallied late in the year.</p>
<p class="paragraph-newsletter-7"><b>Jeff Wendling, president and CEO,
noted in the release that "last year, the market volatility provided an
opportunity to increase our exposure to real return bonds at attractive
valuations, protecting the fund against inflation."</b></p><div class="newsletter-widget-after-paragraph-7"><div id="om-s7xloxw1uaqlsyfuy1eq-holder"></div></div>
<p class="inline-ad-para paragraph-newsletter-8">A real-return bond is a
type of government bond that offers returns adjusted for inflation,
ensuring the purchasing power of the investment is maintained over time,
said the annual report.</p>
<p class="paragraph-newsletter-9"><b>By geography, as of Dec. 31, Canada
accounted for 55% of the plan's assets, followed by the U.S. (24%),
Europe (12%), Asia-Pacific (7%) and other (2%).</b></p>
<p class="paragraph-newsletter-10"><b>The plan's exposure to Canada
includes real estate, such as major industrial and logistics parks,
office towers and housing, said the release.</b></p>
<p class="paragraph-newsletter-11">Asset allocation data was not provided.</p></blockquote><p>Paula Sambo of Bloomberg also <a href="https://financialpost.com/fp-finance/real-return-bonds-gains-hoopp" target="_blank">reports</a> real-return bonds reap gains for HOOPP:</p><p></p><blockquote><p>Canadian inflation-protected
securities known as real-return bonds are reaping gains for one of the
country’s largest pension funds during a turbulent period for
fixed-income markets.</p><p>Healthcare of Ontario Pension Plan became an “aggressive” buyer of the inflation-linked bonds when interest rates
started climbing in 2022, chief investment officer Michael Wissell said
in an interview. By December, the notes represented roughly half of the
fund’s target portfolio allocation to bonds, he said.</p><p><b>“Right now, one of the most compelling things is real-return bonds,”
Wissell said. “This is the ‘Get Out of Jail Free Card’ here. These
notes, which were for years at minus 100 basis points — even more
negative in some jurisdictions — are now offering a real rate of
return.”</b></p><p></p><p><b>Canada stopped issuing the bonds in 2022, making them harder to buy in larger quantities</b>.</p><p></p><p>HOOPP
said Wednesday that it posted an 9.4 per cent return last year, booking
gains in fixed income, stocks, private equity and private credit. The
Toronto-based pension fund — which serves about 460,000 active, deferred
and retired health-care workers in Canada’s most populous province —
<b>increased exposure to bonds after yields rose in the summer and into the
fall, helping net assets grow to $112.6 billion</b>.</p><p></p><p><b>“We used
the volatility in the fixed-income market, which, by all accounts, was
pretty substantial, to continue to add real-return bonds, which are more
difficult to accumulate,” Wissell said. “It is very unlikely that you
will see us selling them anytime soon.”</b></p><p></p><p>The returns for HOOPP’s asset categories are as follows:</p><ul><li>Fund’s fixed-income portfolio advanced 4.3 per cent</li><li>Public equities jumped 15.7 per cent</li><li>Credit grew 4.6 per cent</li><li>Private equity climbed 15.9 per cent</li><li>Private credit gained 9.3 per cent</li><li>Infrastructure advanced 8.2 per cent</li><li>Real estate investments lost 6.5 per cent</li></ul><p><b>“The dispersion that exists within real estate assets is hard to
understand,” Wissell said. </b></p></blockquote><blockquote><p><b>“We’re diversified across segments, and I’m
not sure that I’m smart enough to know which of those segments are going
to be the winners going forward because we’re seeing big price
adjustments across these different sectors.”</b></p></blockquote><p>And James Bradshaw of the Globe and Mail <a href="https://www.theglobeandmail.com/business/article-hospital-pension-plan-earns-938-per-cent-in-2023-but-missed-internal/" target="_blank">reports</a> health care pension plan earns 9.38 per cent in 2023 but missed internal benchmark due to real estate losses:</p><p class="gmail-c-article-body__text gmail-text-pr-5"></p><blockquote><p class="gmail-c-article-body__text gmail-text-pr-5">Healthcare
of Ontario Pension Plan recorded a 9.38-per-cent return on investments
in 2023 as stocks soared but missed its internal benchmark by about one
percentage point as real estate assets struggled.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>In
a year when high interest rates and persistent inflation created
volatility in markets, HOOPP’s returns were bolstered by strong
performance from public stocks and private equity investments, which
respectively gained 15.71 per cent and 15.9 per cent.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>Real
estate had a tough year that resulted in a 6.5-per-cent loss, which was
similar to other large pension plans that have reported annual results.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5">HOOPP’s
real estate holdings are most heavily tilted toward industrial and
logistics properties, which have benefitted from a shift toward
e-commerce, with lesser exposure to hard-hit office and residential
assets. But the values of properties the fund manager owns outside
Canada – which make up about half of its real estate portfolio – were
marked down more rapidly than the buildings it owns in Canada.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>The
weakness in real estate last year “was pretty broad-based,” president
and chief executive officer Jeff Wendling said in an interview.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>“We think the worst of real estate is behind us but it could be another sort of flat-ish year this year,” he said.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5">HOOPP
invests on behalf of about 460,000 employees at 677 employers in
Ontario’s health care sector, including nurses and medical technicians.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>The
pension fund manager’s total assets increased to $112.6-billion, from
$103.7-billion in 2022. And its funded status ended the year at 115 per
cent, which means the plan has $1.15 for each dollar it owes to members.
“And that’s our key metric that we focus on,” Mr. Wendling said.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>“I feel really good about the year.”</b></p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>Over 10 years, HOOPP has earned an average annual return of 8.43 per cent</b>.</p><div class="gmail-BaseAd__StyledRootBaseAd-sc-1khlkqq-1 gmail-l-media"><div class="gmail-c-ad gmail-c-ad--inline gmail-c-ad--oneX4" id="gmail-c-ad--oneX4-gpt-0"><div class="gmail-c-ad__wrapper"><div class="gmail-c-ad__image" id="gmail-oneX4-gpt-0"></div></div></div></div><p class="gmail-c-article-body__text gmail-text-pr-5">HOOPP
also ended the year with 55 per cent of its assets invested in Canada,
which is the largest proportion among any of the eight largest pension
funds in the country.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>“We’re happy to always look at Canada, and we do,” Mr. Wendling said</b>.</p><p class="gmail-c-article-body__text gmail-text-pr-5">A<a href="https://www.theglobeandmail.com/business/article-pension-funds-investing-campaign/" target="_blank"> debate has flared up</a>
after a group of prominent CEOs suggested Canadian pension plans
underinvest in Canada, and that governments should take steps to
encourage them to invest more domestically.</p><p class="gmail-c-article-body__text gmail-text-pr-5">A number of senior pension fund executives, both current and former, have<a href="https://www.theglobeandmail.com/business/commentary/article-dont-meddle-with-canadas-pension-plan-model/" target="_blank"> pushed back</a>,
arguing that anything that detracts from a clear mandate to seek the
best returns possible, relative to the risks involved, could be harmful
to pension funds.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>Asked
about potential new measures that could complicate a pension fund’s
mandate, Mr. Wendling said, “for sure, I have a concern about that.
There are very strong arguments to not doing that. So I’m hopeful those
arguments will prevail.”</b></p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>He
said HOOPP’s mantra is to deliver on its promise to pensioners, and
that the strictly independent governance that most Canadian pension
funds maintain has been key to their relative success.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>“I’d be careful if the borders get muddied with other objectives,” he said.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5">A
large part of HOOPP’s Canadian exposure is to bonds and fixed-income
instruments, including real return bonds that are tied to inflation.
HOOPP boosted its exposure to fixed income as yields spiked. And it is
building up its infrastructure portfolio, which includes investments in
assets that typically have stable cash flows and sometimes also
protection against inflation, which would help reduce HOOPP’s reliance
on bonds.</p><p class="gmail-c-article-body__text gmail-text-pr-5">Investments that
have performed well through a period of high inflation have been key to
HOOPP’s results as investors grapple with the fallout from a period of
high interest rates.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>“There is a risk that maybe [inflation] remains sticky here,” Mr. Wendling said. “And we have to be prepared for that.” </b><br /></p></blockquote><p>Today, HOOPP <a href="https://hoopp.com/en/newsroom-details/hoopp-delivers-9.38-return-in-2023" target="_blank">released</a> its 2023 results stating its success was bolstered by strong Canadian portfolio: <br /></p><p></p><blockquote><p>The Healthcare of Ontario Pension Plan (HOOPP) announced today that
it delivered a 9.38% return in 2023, bringing its net assets to $112.6
billion, up from $103.7 billion at the end of 2022. The <a href="https://hoopp.com/investments/pension-plan-performance/annual-results/">Plan’s funded status</a> remains
very strong at 115%, meaning that for every dollar owed in pensions, it
has $1.15 in assets (all numbers in this release as at Dec. 31, 2023). </p>
<p><b>HOOPP delivered strong returns across many asset classes, including
fixed income, public equities, private equity and private credit. The
investment team increased exposure to bonds after yields rose in the
summer and into the fall, contributing significantly to strong
performance when bond and stock markets rallied late in the year.</b></p>
<p><b>“In 2023, there was considerable economic uncertainty resulting from
several factors, including increased geopolitical tension, persistent
inflationary pressures, and unsteady global growth,” said Jeff Wendling,
President & CEO, HOOPP. “Amidst this volatility, HOOPP delivered
strong returns in support of our pension promise to the healthcare
workers of Ontario.”</b></p>
<p><b>He added: “As a pension delivery organization, we are focused on
building a portfolio to best deliver on the pension promise. Last year,
the market volatility provided an opportunity to increase our exposure
to real return bonds at attractive valuations, protecting the Fund
against inflation and generating value for the Plan.”</b></p>
<p><b>By year-end, inflation-indexed bonds comprised roughly half of
HOOPP’s target portfolio allocation to bonds, which continues to align
investment assets with the Plan liabilities and supported HOOPP’s
ability to grant a cost-of-living adjustment to retired members in 2024.
</b> </p>
<p>The strong 2023 return was bolstered by our strong Canadian
portfolio. <b>Over $60 billion of HOOPP’s assets are invested in Canada.
This includes real estate, such as major industrial and logistics parks,
office towers and housing. It also includes supporting Canadian
innovation and entrepreneurship by investing in home-grown companies</b>.
<b>HOOPP is also one of the biggest investors in Canadian bonds, which
comprise about half the Canadian portfolio</b>. Money raised through
government bond sales helps pay for the public services and
infrastructure Canadians rely on – including hospitals, public
transportation and schools.<br />
<br />
<img alt="Chart outlining HOOPP's geographic exposure for investments in 2023" data-customsizemethodproperties="{'MaxWidth':'800','MaxHeight':'800','ScaleUp':false,'Quality':'High'}" data-displaymode="Custom" data-method="ResizeFitToAreaArguments" height="369" src="https://hoopp.com/images/default-source/newsroom/corporate-news/geographic-exposure-hoopp-2023.png?sfvrsn=9a16a49c_0&MaxWidth=800&MaxHeight=800&ScaleUp=false&Quality=High&Method=ResizeFitToAreaArguments&Signature=6B81E847393620DBA5D316BCE814D3E5B2C0295B" title="HOOPP geographic exposure - 2023" width="640" /></p>
<p><b>“Our commitment to investing in Canada is strong. Canada is not only
our home, but also a safe and stable country that offers attractive
investment opportunities,” said Michael Wissell, Chief Investment
Officer, HOOPP.</b></p>
<p><b>He added: “The bond portfolio is the backbone of HOOPP’s LDI
(Liability Driven Investing) strategy and helps offset the sensitivity
of the Plan’s liabilities to changes in interest rates and inflation.
Bonds provide government-guaranteed rates of return, serve as
high-quality liquid collateral to support other investment activity, and
are a diversifying asset for the Fund.”</b></p>
<p>Other highlights from the year included:</p>
<ul><li><span face="Font-Medium">Climate Plan:</span> Reinforced our long-standing commitment to sustainable investing with the launch of our <a href="https://hoopp.com/investments/sustainable-investing/climate-change">climate change strategy</a> in
March, outlining our approach for achieving net-zero portfolio
emissions by 2050. Progress updates can be found in the Annual Report
and on hoopp.com.</li><li><span face="Font-Medium">Retirement security research:</span> Continued our research around improving retirement security outcomes for all Canadians, including commissioning a <a href="https://hoopp.com/home/pension-advocacy/research/pensions-in-the-next-age-of-uncertainty-stephen-poloz/">discussion paper</a> by
Former Bank of Canada Governor Stephen Poloz, which suggested Canada
may be heading for a renaissance of defined benefit pension plans.</li><li><span face="Font-Medium">Supporting healthcare through growth:</span>
Continued to expand our value to Ontario’s healthcare sector by growing
the number of HOOPP employers from 646 to 677, and the number of
members from 439,630 to 460,381.</li></ul>
<p><b>“HOOPP had a successful year on many fronts and I’m proud of all that
the team accomplished,” Wendling said. “At the core of all we do is our
commitment to our pension promise to the healthcare workers of Ontario,
so we are pleased to have delivered significant value to our members
this past year, maintaining our strong funded status so pensions remain
secure.”</b></p><p> <br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhUWNqGIxrM9CPcud2SF7n_BUOb93Hp-RoDzjcJ1e1n0gjtWEa7LtPEvbf_TI_ljOWRgupmsSf-7Cs718N1r66A29E9M1J_aNtALFkl6_7TdnEzM2dHsZFJALalahI6G2UFa4cjmJqYVUpplZY5aEPLHEMrXU-AN3tmMUbBV0GYzg1G51JNIweyx4EFgb69/s658/HOOPP%20performance%20by%20asset%20class.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="508" data-original-width="658" height="494" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhUWNqGIxrM9CPcud2SF7n_BUOb93Hp-RoDzjcJ1e1n0gjtWEa7LtPEvbf_TI_ljOWRgupmsSf-7Cs718N1r66A29E9M1J_aNtALFkl6_7TdnEzM2dHsZFJALalahI6G2UFa4cjmJqYVUpplZY5aEPLHEMrXU-AN3tmMUbBV0GYzg1G51JNIweyx4EFgb69/w640-h494/HOOPP%20performance%20by%20asset%20class.jpg" width="640" /></a></div><p></p><h3>About the Healthcare of Ontario Pension Plan</h3>
<p>HOOPP serves Ontario’s hospital and community-based healthcare
sector, with more than 670 participating employers. Its membership
includes nurses, medical technicians, food services staff, housekeeping
staff, and many others who provide valued healthcare services. In total,
HOOPP has more than 460,000 active, deferred and retired members.</p>
<p>HOOPP is fully funded and manages a highly diversified portfolio of
more than $112 billion in assets that span multiple geographies and
asset classes. Over $60 billion of HOOPP’s assets are invested in Canada
and HOOPP is one of the biggest investors in Canadian bonds, with over
$40 billion in total government bond holdings. HOOPP is also a major
contributor to the Canadian economy, paying more than $3 billion in
pension benefits to Ontario healthcare workers annually. </p>
<p>HOOPP operates as a private independent trust, and is governed by a
Board of Trustees with a sole fiduciary duty to deliver the pension
promise. The Board is jointly governed by the Ontario Hospital
Association (OHA) and four unions: the Ontario Nurses’ Association
(ONA), the Canadian Union of Public Employees (CUPE), the Ontario Public
Service Employees' Union (OPSEU), and the Service Employees
International Union (SEIU). This governance model provides
representation from both management and workers in support of the
long-term interests of the Plan.</p></blockquote><p></p><p>Earlier today, I had a nice chat with Michael Wissell, CIO of HOOPP, going over their 2023 results.</p><p>I want to thank Michael for taking some time to talk to me this morning. I also want to thank James Geuzebroek and Jackie Emick for setting up the call and sending me material to review on an embargoed basis.</p><p>Before I get to my discussion with Michael, please take the time to read highlights <a href="https://hoopp.com/investments/pension-plan-performance/annual-results/2023" target="_blank">here</a> and the annual report <a href="https://hoopp.com/docs/default-source/investments-library/annual-reports/hoopp-2023-annual-report.pdf" target="_blank">here</a>.</p><p>Let me go over some important items here.</p><p>First, take the time to read Chair Gerry Rocchi and Vice-Chair Dan Anderson's message:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjxV4gSWviSjFgvkkDiFPTlXOyegP5hTn75rMQ2m1dJ731OlqjiVyzva01R62GA-5BNhiUXSAkU5QI4yT8M8f-wUwJdmxglYtM82jx2FO7FiDtiOR9ACoIHqTueqo9OhdHEyhGCbY9LXSKrhjUr6fHx7paVTAvr75p07wziFEXAljBIU6nnkbNjPk8IomXq/s877/HOOPP-Chairs1.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="877" data-original-width="735" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjxV4gSWviSjFgvkkDiFPTlXOyegP5hTn75rMQ2m1dJ731OlqjiVyzva01R62GA-5BNhiUXSAkU5QI4yT8M8f-wUwJdmxglYtM82jx2FO7FiDtiOR9ACoIHqTueqo9OhdHEyhGCbY9LXSKrhjUr6fHx7paVTAvr75p07wziFEXAljBIU6nnkbNjPk8IomXq/w536-h640/HOOPP-Chairs1.jpg" width="536" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgWBTZZreXFNx6pyO4u54CaPGHXjMaCi1p69M3im5Rh-PC2oY1tf5Bwus8z8HS0L-cFfRha6OqkUNy2xl-LcqMikVxB6CC0MpbEo-qQ_XvM6xsGHND_Z2HKNmA7i7HwiJNzNopSM8757jvGGQr5EGlAeXtB7d5fVbRHDtwDn3DxcZQF9X2g1au81zBqI2iQ/s851/HOOPP_Chairs2.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="851" data-original-width="732" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgWBTZZreXFNx6pyO4u54CaPGHXjMaCi1p69M3im5Rh-PC2oY1tf5Bwus8z8HS0L-cFfRha6OqkUNy2xl-LcqMikVxB6CC0MpbEo-qQ_XvM6xsGHND_Z2HKNmA7i7HwiJNzNopSM8757jvGGQr5EGlAeXtB7d5fVbRHDtwDn3DxcZQF9X2g1au81zBqI2iQ/w550-h640/HOOPP_Chairs2.jpg" width="550" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh-GtIOdxLvSUEqsXb3fqjyq962PNXzlvOnPtNDzO2Tg1IsuxbLnUGGvWTs3s5iKdN5H-xgxFypCvQDEAwgt03AqqRdSwK_MZ1ohV3rwLc18kXgNS-ceGSBvr8O3b3df_aVOFH31SNiq3WpqUfcZgWQ3kOtZ9iTYFv6uryy8vRIXx3aR-qPK6snVFunuqUw/s704/HOOPP-Chairs3.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="704" data-original-width="678" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh-GtIOdxLvSUEqsXb3fqjyq962PNXzlvOnPtNDzO2Tg1IsuxbLnUGGvWTs3s5iKdN5H-xgxFypCvQDEAwgt03AqqRdSwK_MZ1ohV3rwLc18kXgNS-ceGSBvr8O3b3df_aVOFH31SNiq3WpqUfcZgWQ3kOtZ9iTYFv6uryy8vRIXx3aR-qPK6snVFunuqUw/w616-h640/HOOPP-Chairs3.jpg" width="616" /></a></div><p>I note the following:</p><p></p><blockquote><p>We are also pleased that <b>the Plan’s funded status remains strong at 115%</b>. This is the one of the best indicators of the overall health of the Plan and its ability to pay pensions over the long run. <b>The strength of the Plan helped us make several decisions that benefit our members.</b></p></blockquote><p></p><blockquote><p>For example,<b> the Board provided cost-of-living adjustments (COLA) to help pensions keep up with rising prices. Retired and deferred members will receive an increase of 3.40%, starting April 1, 2024, in addition to the 6.32% increase received in 2023</b>. We know how important this is for retired members, particularly in the current environment. <b>HOOPP has a strong history of providing COLA at 100% of the rate of increase in the Consumer Price Index.</b></p></blockquote><p></p><p>When you're in a position of strength, you can deliver on your pension promise and also offer full indexation when the cost of living soars.<br /></p><p>This is why HOOPP's retired and deferred members will receive an increase of 3.40%, starting
April 1, 2024, in addition to the 6.32% increase received in 2023.</p><p>Next, take the time to read CEO Jeff Wendling's message:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgGC1yQdPpYodF6BC_xRaSb2W1N9gl9vz1KtkiWZ-brlAnOg36fNAvYfPtYtdWDDm34STsCfnDyiNfLTcXmKSfjGG7aQkG60XYOgD_mREUUoQTFH7J-ARZ5XBlsJu_0LWH79H0mVz07aLqr2UpUSmBwUNEuSsmvTZCbwiMpwcC_P4NaKQFIhnt9LI7fBYpC/s891/HOOPP%20CEO-1.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="891" data-original-width="733" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgGC1yQdPpYodF6BC_xRaSb2W1N9gl9vz1KtkiWZ-brlAnOg36fNAvYfPtYtdWDDm34STsCfnDyiNfLTcXmKSfjGG7aQkG60XYOgD_mREUUoQTFH7J-ARZ5XBlsJu_0LWH79H0mVz07aLqr2UpUSmBwUNEuSsmvTZCbwiMpwcC_P4NaKQFIhnt9LI7fBYpC/w526-h640/HOOPP%20CEO-1.jpg" width="526" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjR3ag5QLGeCFzQjyYu0yNDQaGgEX1ZulM01_pqyA1Q8Xp5k1m_2NT6PpGL5zi7n7zikbw2gyLf7Q5FZUXU0itDU1o6QLo2p7XDtZd4VSa5EKjmcmkq1kEZPK-LkZ4jE0yq3yKwjChJmBaIgYOKG1Jus3Xg7py7Ilji7wk62s5uoa_8FhcbbmAF7fIVG0m5/s885/HOOP-CEO2.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="885" data-original-width="732" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjR3ag5QLGeCFzQjyYu0yNDQaGgEX1ZulM01_pqyA1Q8Xp5k1m_2NT6PpGL5zi7n7zikbw2gyLf7Q5FZUXU0itDU1o6QLo2p7XDtZd4VSa5EKjmcmkq1kEZPK-LkZ4jE0yq3yKwjChJmBaIgYOKG1Jus3Xg7py7Ilji7wk62s5uoa_8FhcbbmAF7fIVG0m5/w530-h640/HOOP-CEO2.jpg" width="530" /></a></div><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgsSlenKjBlVc5cCLuiAKR3vZRYVigsSpNCWIxa3vw1zhgNfF2gc94K_c-6CZ8IKypq5x5kxXPLq4LPzoswTqlNLWtMQyZbR7AtROeXsdhYfb67js9NYSAdeKOiL0AMWZy3asSTtIo8SX4vRMDveKwt487t5iYBCb_ZioC3AQq2ElGfPmb8dcwHKR4QTNnP/s735/HOOPP-CEO3.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="684" data-original-width="735" height="596" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgsSlenKjBlVc5cCLuiAKR3vZRYVigsSpNCWIxa3vw1zhgNfF2gc94K_c-6CZ8IKypq5x5kxXPLq4LPzoswTqlNLWtMQyZbR7AtROeXsdhYfb67js9NYSAdeKOiL0AMWZy3asSTtIo8SX4vRMDveKwt487t5iYBCb_ZioC3AQq2ElGfPmb8dcwHKR4QTNnP/w640-h596/HOOPP-CEO3.jpg" width="640" /></a></div><p></p><p>I note the following:</p><p><b></b></p><blockquote><p><b>Strengthening our investment activities</b></p><p>To complement our significant investment holdings in Canada, we are strengthening our ability to add to our global investment exposure. To this end, we were busy in 2023 preparing for the opening of our London,England office in the first half of 2024. <b>This physical presence in the U.K. will enhance our access to high-quality investment opportunities in Europe, particularly in private markets</b>, as we deepen existing relationships and develop new ones in the international investment community.</p><p><b>Strengthening our risk management activities</b> </p><p>We also continued to strengthen and build out our risk management and compliance frameworks, capabilities and policies, including new analytical tools and methodologies for managing investment risks, enhanced tools for analyzing and reporting on operational risk, and further developments in comprehensive risk reporting. Robust policies, effective governance, and a strong risk aware culture help increase the organization’s resilience.</p></blockquote><p>There's more but clearly HOOPP is looking to expand its international presence to seize opportunities in private markets and needs to open an office in London to start developing and nurturing the right relationships there.</p><p>I also want to congratulate Jeff for marking his 25th anniversary at HOOPP.</p><p>Jeff succeeded Jim Keohane and has done a great job steering this big pension plan in the right direction, focusing on implementing <a href="http://pensionpulse.blogspot.com/2020/09/hoopps-ceo-on-ldi-20-in-zero-bound-world.html" target="_blank">HOOPP's LDI 2.0</a> and continuing the <a href="http://pensionpulse.blogspot.com/2024/02/time-to-expand-cpp-again-during-age-of.html" target="_blank">great work on advocacy</a> Jim and other predecessors had done as well.</p><p>My only criticism of HOOPP, and I stated this earlier to Michael, James and Jackie, is I need to see a lot more transparency on investment activities, compensation and other areas.</p><p>In fact, I want to have more interviews with Michael Wissell, Jeff Wendling, Lori Hall-Kimm, Eric Plesman, Jacky Lee, Stephen Smith and other <a href="https://hoopp.com/investments/investment-team-hoopp" target="_blank">senior investment professionals</a> at HOOPP to drill down and see exactly what they are doing.<br /></p><p>I know, "HOOPP is in the pension delivery business" and it's a private trust so it doesn't really need to answer to me or anyone else, but it manages<b> C$112.6 billion in net assets</b> and it's high time it revamps its communications strategy and be more out there and be a lot more transparent (all of Canada's Maple Eight should follow CPP Investments' lead in terms of transparency and even try to do better).</p><p><b>Keep in mind, HOOPP is a private trust but it manages the pension assets of Ontario's healthcare workers which are public sector workers.</b></p><p>That is my only bone to pick with this outstanding organization, <b>STOP FLYING UNDER THE RADAR</b>, I know it's easier to do so but time to rethink this strategy and come out more than once a year when you release results.</p><p>Alright, now that I threw that out there, let me also cover some other tidbits.</p><p>The table below shows HOOPP's short-term and long-term performance relative to its benchmark:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj6xNenxseN1DfRU00TmJU2DlxPM954S_tqUHO0blSvbaZCSIA7UKLKOqCz4onkzhljgy7_NdbuYERM5696zJup8eKtrNPkzcg7teF_Ku-51MtFFPY-gDp3AFJmU6YpK4dXSD4WytWJwWsC5rZiyPFUIqSQ_9dOavTjzVICFCjlJYsolXdH_uR1ZSL9H_xD/s786/HOOPP%20_LT%20performance.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="224" data-original-width="786" height="182" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj6xNenxseN1DfRU00TmJU2DlxPM954S_tqUHO0blSvbaZCSIA7UKLKOqCz4onkzhljgy7_NdbuYERM5696zJup8eKtrNPkzcg7teF_Ku-51MtFFPY-gDp3AFJmU6YpK4dXSD4WytWJwWsC5rZiyPFUIqSQ_9dOavTjzVICFCjlJYsolXdH_uR1ZSL9H_xD/w640-h182/HOOPP%20_LT%20performance.jpg" width="640" /></a></div><p>As shown above, the Plan underperformed its benchmark by 98 basis in 2023, owing to weakness in real estate where there was widespread weakness according to Jeff Wendling:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg7J9hlz3u6KLqczxwTOGXx_Bo0738zW4W4XDo2hhiR774TpBFXrlGxZ9ZcGykwbryz72DeOrd1frybGXG3cXm7zNhtPFBplgAhFyBme5EPB7yWSqclKxUWViPN9M4C03YrHgmZp9ByEJTs78TqGZPIQ3MWEw_Ette8MCC7eJaMDHIVOf7p-_5JwCq1gfvQ/s770/HOOPP%20net%20inv%20income%20by%20asset%20class.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="520" data-original-width="770" height="432" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg7J9hlz3u6KLqczxwTOGXx_Bo0738zW4W4XDo2hhiR774TpBFXrlGxZ9ZcGykwbryz72DeOrd1frybGXG3cXm7zNhtPFBplgAhFyBme5EPB7yWSqclKxUWViPN9M4C03YrHgmZp9ByEJTs78TqGZPIQ3MWEw_Ette8MCC7eJaMDHIVOf7p-_5JwCq1gfvQ/w640-h432/HOOPP%20net%20inv%20income%20by%20asset%20class.jpg" width="640" /></a></div><p>What else? The first article above notes that HOOPP doesn't provide asset allocation data which is true, you need to deduct it on your own but you can read <a href="https://hoopp.com/docs/default-source/investments-library/policies-agreements/hoopp-statement-investment-policies-procedures.pdf?sfvrsn=4" target="_blank">HOOPP's statement of investment policies</a> to see what their long-term asset mix and target allocations for each asset class are:<br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEinTpgn3DLP-cUlcZ6YmjUhgtHqWAG8YHDnHN3dxBo9VLwdoiNsJp8t4E5eNxJEX7BKOf3_iAhmdZsyRKSP4gO8DyLIYfQtFEdpmaFn5rUDmmZZRiXQNPYULPQBsWHj8mnBpWFNU63Q2udmqdfpllJln0iHlA_O6bTiddFkYqSPF5mp8nD-ESEjNdux4JDW/s837/HOOPP%20LT%20asset%20mix.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="481" data-original-width="837" height="368" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEinTpgn3DLP-cUlcZ6YmjUhgtHqWAG8YHDnHN3dxBo9VLwdoiNsJp8t4E5eNxJEX7BKOf3_iAhmdZsyRKSP4gO8DyLIYfQtFEdpmaFn5rUDmmZZRiXQNPYULPQBsWHj8mnBpWFNU63Q2udmqdfpllJln0iHlA_O6bTiddFkYqSPF5mp8nD-ESEjNdux4JDW/w640-h368/HOOPP%20LT%20asset%20mix.jpg" width="640" /></a></div><p>Again, it would be a good idea just to include a table breaking down asset allocation <b>in detail</b> and explain the asset mix in detail because it's critically important to understand.</p><p>Lastly, I bring to your attention this chart which shows total benefits have exceeded total contributions since 2018:<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEicyO88ZDl5QGnc9A_hhBDy9R-O-bqCCavjEdoLumD85KMJAzrKWOHOZ4Ko-AIZA1ngxNViUklno9VjKugB2u9FM055OBGAEaamCAQx7Kk3m0-I_Jaszn_egHxS8va_bNakHMz_Ozn9Q4GozsrHZ9vqFx1vA_pvkmV0mNXCoEsgnd0ZWnzu0qq9rJRQCcRJ/s893/HOOPP%20benefits%20vs%20contributions.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="845" data-original-width="893" height="606" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEicyO88ZDl5QGnc9A_hhBDy9R-O-bqCCavjEdoLumD85KMJAzrKWOHOZ4Ko-AIZA1ngxNViUklno9VjKugB2u9FM055OBGAEaamCAQx7Kk3m0-I_Jaszn_egHxS8va_bNakHMz_Ozn9Q4GozsrHZ9vqFx1vA_pvkmV0mNXCoEsgnd0ZWnzu0qq9rJRQCcRJ/w640-h606/HOOPP%20benefits%20vs%20contributions.jpg" width="640" /></a></p>As stated, this reflects the maturation of the Plan but worth noting that "this is an expected<br />outcome as a pension plan naturally matures and does not indicate that HOOPP is unable to pay<br />its promised benefits."<br /><p></p><p>Also keep in mind that HOOPP is still relatively young compared to OTPP and OMERS and is still growing its members (younger demographics).</p><p><b>Discussion with CIO Michael Wissell</b></p><p>Alright, enough with the preliminaries, let's get to my discussion with Michael Wissell.</p><p>Michael is a really nice guy, super smart, very experienced, worked many years at OTPP before joining HOOPP and he really knows his stuff.</p><p>We started off by discussing my spinal fusion surgery and how those ten days in the hospital opened my eyes once again to how nurses, doctors, personal assistants (orderlies), cleaning crews, technicians, you name it, are all incredibly dedicated employees working long, grueling hours.</p><p>Importantly, unless you see it with your own eyes, you will never understand how demanding these jobs are and as Michael correctly pointed out, apart from nurses which make decent wages, the rest make modest incomes and are relying on a modest pension of roughly $30,000 a year to get by during retirement.</p><p>For the most part, the public is totally clueless about what nurses and personal assistants are actually doing at hospitals, let me assure you it's not glamorous work but it's necessary work which serves a social purpose and it takes very patient and dedicated staff to do this job over many years.</p><p>Also keep in mind, as Canada's population ages, patients are older and require a lot more care, especially if they are suffering from dementia. <br /></p><p>I also saw this dedication when my baby boy was born one month prematurely in late September and his mother and I had to take shifts going to the Neonatology Intensive Care Unit (NICU) for ten stressful days. The nurses and staff there were incredible individuals doing very important work, taking care of precious newborns. </p><p>All this to say, HOOPP is taking care of the pensions of very important people working at Ontario's healthcare sector and that isn't lost on Michael Wissell and other employees there (<b>they also take part in their pension plan and thus have skin in the pension outcomes</b>).</p><p>Michael agreed with me, that healthcare workers are kind, patient, compassionate and most of them don't get paid a lot for the work they do (similar to teachers), adding this:</p><p></p><blockquote>"We are not in the money management business, <b>we are in the pension delivery business</b>, we take very seriously the opportunity to help healthcare workers focus on the job at hand, and not worry about their retirement."</blockquote><p></p><p>He reiterated: "These are humble workers making a modest living and getting a modest pension, and it's part of our ethos here to focus on the sustainability of their pension so they don't have to worry about it."<br /></p><p>We then got into it and Michael gave me an overview of results:</p><p></p><blockquote><p>We returned 9.38% last year. All the asset classes did well with the exception of real estate which is adjusting to the higher cost of capital. As you know, our real estate portfolio is incredibly diversified relative to some others out there. We have a decent allocation to multifamily and logistics properties ( a little more than 50% combined). Offices are manageable for us because it isn't a big weight and we have premium assets like the two big towers we own on York street and we will continue to do very well.</p><p>It's true our aggregate returns for real estate was down for the year but I think we've taken the bulk of the losses we will see there and I think diversification inside our portfolio will continue to pay dividends as we go forward.</p></blockquote><p></p><p>We then moved on to discuss fixed income where HOOPP is very active. I noted that last year was a very volatile year in terms of long bond yields and if we didn't have that end-of-year rally in bonds, a lot of investors would have lost money, including Teachers'.</p><p>Michael replied:</p><p></p><blockquote><p>It's interesting, you're right, in the near term that volatility is a challenge but in the medium and long term that volatility creates that opportunity to create lasting value. </p><p>I'll give you two examples. We run a liability-driven investments portfolio to defuse our liabilities, we are in the pension delivery business, not the money management business, but that doesn't mean we are not dynamic in terms of managing our fixed income portfolio. And given that range of volatility, there are opportunities to reduce your holdings, there are opportunities to increase your holdings, all within one year because of that magnitude of volatility.</p><p>At the same time, and this was really key for us, we are planning and hoping to pay COLA-adjusted pensions for our members and that means when we get the opportunity to pick up in large amounts real return bonds, we grab that opportunity. Don't forget, <b>we had negative real rate bond yields here</b> for a long time and the backup in yields in 2022 and 2023 gave pension plans an opportunity to buy and accumulate real return bonds with yields above 2% and 2.5%. Those are really constructive long-term investments for the health of a plan.</p><p><b>So the volatility in nominal yields in 2023 was challenging in the near term but it was an enabler at the same time. allowing us to better position ourselves going forward</b>.</p></blockquote><p></p><p>I noted that Canada foolishly stopped issuing real return bonds but he told me there are some still around and they trade TIPS (Treasury Inflation Protected Securities) and the volatility last year enhanced liquidity in this market, allowing them to accumulate RRBs.</p><p>He added: <b>"We have a significant allocation to real return bonds in our fixed income portfolio which we think in a deep far left tail situation will serve us well. Real rates can go up but they can only go up by so much"</b></p><p>That's smart risk management.</p><p>I asked Michael if they feel inflation stickiness will persist and he replied:</p><p></p><blockquote><p>It's difficult to know how inflation will unfold over the next several years and so like anything that's unknowable, we diversify. If a recession is all I had to worry about, I can just go nominals. <b>But if I need to also worry about inflation stickiness and a reemergence of inflation, those real return bonds will do better in that environment.</b></p><p>So we take a very diversified approach to our portfolio because as you mentioned, these are volatile times and our crystal ball is only so clear.</p></blockquote><p></p><p>We shifted our discussion to private equity where I noted they performed very well, better than their larger peers which are seeing lower returns as the cost of financing and higher labor costs have hit margins, and I asked him if that's because HOOPP has a mid-market focus.</p><p>Michael replied:<br /></p><p></p><blockquote><p>We had some interesting product wins (HOOPP exited a long-held investment in Alberta-based Champion Petfoods, best known for their ACANA and ORIJEN brands, after the company agreed to be acquired by a global US-based consumer goods company). We are more mid-market and we are more about value creation than financial engineering. </p><p>We were not involved previously in venture. We are using this market to establish our venture platform. So we don't have any legacy venture assets that did very poorly last year. And our sector allocation worked out well as we were in the right ones and not in ones with material headwinds (he didn't provide details on that and none were made available in annual report either).</p><p>So mid-market, lack of venture although we are using this market to get into it, sector selection and idiosyncratic wins all contributed to private equity's performance last year.</p></blockquote><p>All true but if I were to drill down and do a performance audit, I'd say the sale of Alberta-based Champion Petfoods to a global US-based consumer goods company contributed significantly to PE returns last year.</p><p>What about infrastructure? Here is what Michael noted:</p><p></p><blockquote><p>As you know, we are in a very different space in infrastructure because we are just rolling out our portfolio. We have a 5% policy weight in our portfolio. First of all, the team has done a great job. Secondly, you have a bit of a J-curve effect where it takes a while before you really start to see investment decisions really come to the forefront.</p><p>We had a surprisingly strong year in infrastructure last year but I would suggest that's still a relatively low rate and all the investments have been made in the last five years. Our comparatively stronger returns have been made over the last five years and we've been very fortunate to make good investments over those last five years.</p></blockquote><p></p><p>I noted that right now HOOPP is using external partners to co-invest in infrastructure but as Jo Taylor told me yesterday, the pricing isn't there yet so to really scale meaningfully into that asset class isn't easy until we see serious dislocations.</p><p>So for HOOPP to go from 5% to 15% in infrastructure, it will take several more years.</p><p>Michael replied: <br /></p><p></p><blockquote><p>Here's the good news, we are not in the capital deployment business, we are in the pension delivery business which means <b>we can be incredibly patient</b>. One of the great advantages of working at a pension plan as opposed to some other entity is we can be incredibly patient. <b>It's what we don't do some years that really pay dividends</b>.</p><p>So our teams across all of the private markets have been quite patient in picking our spots and watching the higher cost of capital working its way through the marketplace.<br /></p><p>And that higher cost of capital is working its way through the marketplace in very uneven ways. Some sectors are seeing that happen sooner, some to your point because of the sheer quantum of dollars being put to work not adjusting in the way they should. <b>But over the course of time, you're going to get those risk-reward relationships come in line with the higher cost of capital, and while you're waiting for that to happen, you just have to be patient.</b></p></blockquote><p></p><p>On Credit and specifically private debt, here's what Michael notes:</p><p></p><blockquote><p>We put private credit in our policy portfolio in 2023. We've invested in private credit for many years but more from a value-added perspective. It's a 5% weight in the policy portfolio, we had very strong returns last year, the team did a great job. </p><p><b>Our approach to private credit is perhaps a bit different because it's a collaborative approach. It's the one area where our capital markets team has a sleeve in it, our real estate teams has a sleeve in it and or private equity team has a sleeve in it and they collectively populate that 5%. And that collaborative approach really paid dividends in 2023 because you're constantly cross-referencing risk-reward opportunities across sectors, across silos in the private as well as pubic markets in terms of what's available</b>.<br /></p><p>We are relatively constructive on private credit, acknowledging that the asset class has done well and there might be some mean reversion but the underpinnings remain healthy. I'm not sure the regional banks any time soon are going to be the force they were in he years gone by and that's going to create opportunities in the mid-market private investments and we remain relatively constructive.</p></blockquote><p></p><p>I tend to agree except big banks are getting into the space in a big way and that can ruin it for everyone.</p><p>HOOPP is also working with external partners to fund opportunities in the space and they also find internal opportunities.</p><p>HOOPP also scaled up its investments in external hedge funds to complement their internal absolute return strategies, going external when they cannot replicate alpha internally.</p><p>He told me absolute return strategies had a good year after a few great years but didn't provide me with details on how much they are allocating there saying it's not public information (make it public!).</p><p>It's funny, I used to allocate to the best hedge funds all over the world, still track them very closely, makes me chuckle when Canada's Maple Eight are all secretive about hedge funds (no big secret).</p><p>Lastly, I asked Michael where he sees the biggest risks going forward:</p><p></p><blockquote><p>We use a factor based approach to understand our risks and our risks are inflation, growth and real rates. We are 26% in public equities,, we are comfortable with that, we think equities are fairly priced. We are 12% in private equity, it continues doing well and has done well over time. We are really proud of the returns in that portfolio, Lori-Hall Kimm is doing a phenomenal job managing that team and working with some really expert investors. </p><p>And by bringing that bond portfolio in to better balance between reals and nominals, we think we can mitigate any growth shocks that might come down the pipe. </p><p>Quite frankly, I think this is going to be a decent year, still relatively constructive going forward.</p></blockquote><p>I told him I remain bearish but Q1 was exceptional as herding in Nividia and a few other Mag 7 continued and I remain focused on trading my biotech stocks as they swing like crazy.</p><p>He told me to remain diversified and they have a relatively small allocation to emerging markets.</p><p>I reiterated my plea to see more transparency at HOOPP and ramp up their communications strategy but Teams froze and I'm not sure if that was done purposely (lol, it wasn't, they probably think I'm a pain in their pension ass but I'm saying this to all of Canada's Maple Eight for their own good as I know what is going on in the background at governments).</p><p>Alright, let me once again thank Michael Wissell for another great discussion, he's a really nice guy and sharp as hell, I'd recommend working at HOOPP just to gain exposure to him, Lori, Eric and others.</p><p>Below, Jeff Wendling, president and CEO of HOOPP, <a href="https://www.bnnbloomberg.ca/real-estate/video/we-have-a-very-large-investment-here-in-canada-hoopp-ceo~2884645" target="_blank">appeared on BNN Bloomberg</a> earlier to discuss their investments in Canada and why they're now expanding abroad.</p><p>Listen carefully to Jeff's comments, I think he nailed it and answered tough questions very clearly. He also discusses markets and where they see opportunities.<br /></p><p><iframe allow="autoplay; clipboard-write; encrypted-media; picture-in-picture" allowfullscreen="" frameborder="0" height="360" src="https://embed.jasperplayer.com?brand=BNN&destination=bnn_web&language=EN&contentId=2884645" width="640"></iframe></p><p></p>Leo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.com0tag:blogger.com,1999:blog-5879608286191780679.post-82046274029915734812024-03-12T21:30:00.008-04:002024-03-13T11:49:02.554-04:00Ontario Teachers’ Returns 1.9% in 2023<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEguvLRtm3etoHoK0RqfNDy-DknCfVPrWHg93t4SyWcVsHMWPndxC_v5W2wcda_z5Tcbp6kJPCXgeSwL_slzwYYmFQwrJL2eNrAPeforTAj6oaA_ciVE046Ag46D_YnbMOX6VZJa_zRK9N0gdYph-bGwxRZQ6p8kVMGPsSzjyzWU5Px48pDKFcJuVNHke8T6/s526/OTPP%20-%202023%20highlights.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="526" data-original-width="376" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEguvLRtm3etoHoK0RqfNDy-DknCfVPrWHg93t4SyWcVsHMWPndxC_v5W2wcda_z5Tcbp6kJPCXgeSwL_slzwYYmFQwrJL2eNrAPeforTAj6oaA_ciVE046Ag46D_YnbMOX6VZJa_zRK9N0gdYph-bGwxRZQ6p8kVMGPsSzjyzWU5Px48pDKFcJuVNHke8T6/w286-h400/OTPP%20-%202023%20highlights.jpg" width="286" /></a></div>Matt Toledo of Chief Investment Officer <a href="https://www.ai-cio.com/news/ontario-teachers-returns-1-9-in-2023/?apos=1_art&utm_source=newsletter&utm_medium=email&utm_campaign=CIOAlert&oly_enc_id=6577F9112245D4Z" target="_blank">reports</a> Ontario Teachers’ returns 1.9% in 2023:<p></p><p><span data-contrast="auto"></span></p><blockquote><p><span data-contrast="auto">The Ontario Teachers’ Pension Plan </span><a href="https://www.otpp.com/en-ca/about-us/news-and-insights/2024/ontario-teachers-announces-2023-results/" target="_blank"><span data-contrast="none">announced</span></a><span data-contrast="auto">
it returned 1.9% in 2023, significantly underperforming its benchmark
of 8.7%. The fund saw its assets grow to C $247.5 billion ($183.41
billion) in 2023, with the fund setting a goal of reaching C$300 billion
in assets by 2030.</span><span data-ccp-props="{"201341983":0,"335559739":160,"335559740":259}"></span></p><p><b><span data-contrast="auto">Poor
returns were attributed to losses from real estate and infrastructure
investments offsetting strong performance in equities and credit. </span><span data-ccp-props="{"201341983":0,"335559739":160,"335559740":259}"></span></b></p><p><b><span data-contrast="auto">“</span><span data-contrast="none">The
benchmark underperformance was driven by several factors, including a
relative underexposure in listed equities, which performed strongly
through the year, as well as valuation adjustments in the infrastructure
and real estate portfolios due to higher interest rates and
asset-specific events that negatively impacted select investments,” fund
officials wrote in a release. </span></b><span data-ccp-props="{"201341983":0,"335557856":16777215,"335559685":-20,"335559737":-20,"335559739":160,"335559740":259}"></span></p><p><span data-contrast="auto">Ontario Teachers’, formed in 1990, has posted annualized one, five and 10-year returns of 1.9%, 7.2% and 7.6%, respectively. </span><span data-ccp-props="{"201341983":0,"335559739":160,"335559740":259}"></span></p><p><span data-contrast="auto">Public
equity, private equity and venture growth returned 20%, 3.6% and
negative 0.7% in 2023, compared with benchmarks of 20.3%, 16.3% and
12.8%, respectively. These asset classes represent 10%, 34% and 3% of
the portfolio.</span><span data-ccp-props="{"201341983":0,"335559739":160,"335559740":259}"></span></p><p><span data-contrast="auto">Credit, 16% of the portfolio, returned 9.1%, slightly less than the fund’s 9.6% benchmark. </span><span data-ccp-props="{"201341983":0,"335559739":160,"335559740":259}"></span></p><p><span data-contrast="auto">Bonds
and real-rate products returned 0.6% and 7.3%, respectively, with these
fixed-income assets meeting their benchmarks. These two assets
comprised 35% and 4% of the fund’s portfolio. </span><span data-ccp-props="{"201341983":0,"335559739":160,"335559740":259}"></span></p><p><span data-contrast="auto">Inflation-sensitive
assets like commodities and inflation hedge assets returned negative
0.5% and negative 3%, matching their benchmarks, with natural resources
returning 0.2%, less than their 3.3% benchmark. These assets made up 9%,
5% and 5% of the portfolio, respectively.</span><span data-ccp-props="{"201341983":0,"335559739":160,"335559740":259}"></span></p><p><span data-contrast="auto"><b>Finally,
real assets like real estate and infrastructure returned negative 5.9%
and negative 2.8%, well off of the benchmarks of 2% and 7.6%,
respectively. These two assets comprise 12% and 16% of the portfolio. </b></span><span data-ccp-props="{"201341983":0,"335559739":160,"335559740":259}"></span></p><p><b><span data-contrast="auto">These returns are not what was expected, Jo Taylor, Ontario Teachers’ president and CEO, noted in the release: </span><span data-contrast="none">“While
we advanced key strategic areas of focus in 2023, we did not generate
investment results to desired levels. This was largely due to
positioning the portfolio for a more challenging economic environment
than ultimately transpired, our relatively lower exposure to public
equities, and valuation adjustments in certain real estate and
infrastructure assets.” </span></b><span data-ccp-props="{"201341983":0,"335559739":160,"335559740":259}"></span></p><p><span data-contrast="none"><b>The
pension fund, like many other Canadian funds, has a surplus in funding</b>.
Ontario Teachers’ reported a funding surplus of C$19.1 billion by the
end of 2023. The fund also reported investment income of C$5.5 billion,
contributions of C$3.3 billion, C$7.6 billion in benefits paid and
administrative expenses of C$0.9 billion. </span><span data-ccp-props="{"201341983":0,"335559739":160,"335559740":259}"></span></p><p><span data-contrast="none"><b>“We
remain fully funded and delivered a positive return, which are both
important financial metrics for our members,” Taylor said in the
statement. “As a pension plan with multi-generational liabilities, our
investment strategy is intentionally designed for stable long-term
returns.”</b></span></p></blockquote><p>Barbara Shecter of the National Post also <a href="https://financialpost.com/fp-finance/ontario-teachers-pension-plan-returns-disappoint" target="_blank">reports</a> that Ontario Teachers' returns disappoint as markets soar and interest rates hit real estate:</p><p></p><blockquote><p>The Ontario Teachers’ Pension Plan ended 2023 with disappointing results after allocating assets based on <a data-evt-typ="click" data-evt-val="{"control_fields": {"mparticle": {"keys": {"click_source_type": "click_source_type", "anchor_text": "anchor_text", "target_url": "target_url", "layout_section": "layout_section"}, "mp_event_type": "Navigation", "extra_keys": ["click_vertical_position_percentage", "click_vertical_position_pixels"]}}, "click_source_type": "in-page link", "anchor_text": "expectations of a recession", "target_url": "https://financialpost.com/tag/recession/", "layout_section": "in-page-link"}" data-evt="click" href="https://financialpost.com/tag/recession/" rel="noopener noreferrer" target="_blank">expectations of a recession</a>, but chief executive Jo Taylor said he’s not planning a major shift into equities given that markets still look overheated.</p><p>Underexposure to listed equities plus valuation adjustments in Teachers’ infrastructure and <a data-evt-typ="click" data-evt-val="{"control_fields": {"mparticle": {"keys": {"click_source_type": "click_source_type", "anchor_text": "anchor_text", "target_url": "target_url", "layout_section": "layout_section"}, "mp_event_type": "Navigation", "extra_keys": ["click_vertical_position_percentage", "click_vertical_position_pixels"]}}, "click_source_type": "in-page link", "anchor_text": "real estate portfolios", "target_url": "https://financialpost.com/category/real-estate/property-post/", "layout_section": "in-page-link"}" data-evt="click" href="https://financialpost.com/category/real-estate/property-post/" rel="noopener noreferrer" target="_blank">real estate portfolios</a> stemming from <a data-evt-typ="click" data-evt-val="{"control_fields": {"mparticle": {"keys": {"click_source_type": "click_source_type", "anchor_text": "anchor_text", "target_url": "target_url", "layout_section": "layout_section"}, "mp_event_type": "Navigation", "extra_keys": ["click_vertical_position_percentage", "click_vertical_position_pixels"]}}, "click_source_type": "in-page link", "anchor_text": "higher interest rates", "target_url": "https://financialpost.com/tag/interest-rates/", "layout_section": "in-page-link"}" data-evt="click" href="https://financialpost.com/tag/interest-rates/" rel="noopener noreferrer" target="_blank">higher interest rates</a> led to a net return of 1.9 per cent to end the year with $247.5 billion in assets.</p><section class="article-content__content-group article-content__content-group--story"><p></p><p><b>“We
only have about 10 per cent of our portfolio invested in listed
equities,” Taylor said in an interview, adding that what the pension did
hold performed well as markets soared at the end of last year. “But you
look at valuations as we go into 2024 — they look as challenging if not
more challenging than they were when we entered 2023, and that’s going
to be an interesting debate for us in terms of, if we want to blend the
risk up a little bit, how we do that?” he said.</b></p><p></p><h2>Real estate</h2><p></p><p data-async="">About 28 per cent of the fund is invested in <a data-evt-typ="click" data-evt-val="{"control_fields": {"mparticle": {"keys": {"click_source_type": "click_source_type", "anchor_text": "anchor_text", "target_url": "target_url", "layout_section": "layout_section"}, "mp_event_type": "Navigation", "extra_keys": ["click_vertical_position_percentage", "click_vertical_position_pixels"]}}, "click_source_type": "in-page link", "anchor_text": "global real estate", "target_url": "https://financialpost.com/category/real-estate/", "layout_section": "in-page-link"}" data-evt="click" href="https://financialpost.com/category/real-estate/" rel="noopener noreferrer" target="_blank">global real estate</a>
and infrastructure, both of which took valuation hits in the higher
interest rate environment. Taylor said some retail space in downtowns
was affected by continuing struggles in the aftermath of the COVID-19
pandemic, while an infrastructure project in Europe was subject to a
regulatory change that affected projections.</p><p></p><p><b>Adjustments
were made to real estate capitalization rates — an indicator of the rate
of return expected from an investment based on operating income and
costs —<span class="Apple-converted-space"> </span>in both 2022 and
2023, Taylor said. Now, the pension fund is in a holding pattern to see
whether interest rates come down, he said.</b></p></section><p>Teachers’ real estate portfolio generated a negative return of 5.9
per cent against a positive benchmark of two per cent in 2023. For
infrastructure, the 2023 return was negative 2.8 per cent against a
benchmark positive return of 7.6 per cent.</p><p></p><p><b>“The overall
prognosis for real estate, I would say, in 2024 and possibly 2025 is
still pretty tough,” Taylor said, through he added that Teachers’
Canadian real estate portfolio is fairly concentrated in major cities,
including Toronto and Vancouver, that are doing relatively well.<span class="Apple-converted-space"> </span></b></p><p><b>“We’ve
got good occupancy within our office portfolio and pretty good
occupancy levels in our retail portfolio as well, so operationally
they’re doing fine. It’s just really, who would want to buy at what
prices in terms of transaction values.”</b></p><p></p><p>Taylor said Teachers’ is not looking to be a seller at the moment.</p><p></p><p><b>“We like the assets we have, but I think if you did want to sell anything, people would be looking for a bargain at the moment.”</b></p><p></p><h2>Investing in Canada</h2><p></p><p data-async="">Taylor said <a data-evt-typ="click" data-evt-val="{"control_fields": {"mparticle": {"keys": {"click_source_type": "click_source_type", "anchor_text": "anchor_text", "target_url": "target_url", "layout_section": "layout_section"}, "mp_event_type": "Navigation", "extra_keys": ["click_vertical_position_percentage", "click_vertical_position_pixels"]}}, "click_source_type": "in-page link", "anchor_text": "his response to the growing debate", "target_url": "https://financialpost.com/fp-finance/pensions-urged-to-invest-more-in-canada", "layout_section": "in-page-link"}" data-evt="click" href="https://financialpost.com/fp-finance/pensions-urged-to-invest-more-in-canada" rel="noopener noreferrer" target="_blank">his response to the growing debate</a>
about whether Canadian pensions should invest more in their home market
is to continue on the path Teachers’ has followed since it was set up
in its current form as an active investor in 1990.</p><p><b>“We are investing in Canada. We have $20 billion in (real estate
unit) Cadillac Fairview in Canada. We have about $100 billion in total
in Canada, it’s about 35 per cent of our portfolio,” he said, adding
that the run rate for private equity investing in Canada is around 15 to
20 per cent. “So what are we not doing? We’re probably not investing a
lot in Canadian listed equities. But, you know, I think we invest enough
in other areas to compensate for that.”</b></p><p><b>When it comes to
Canadian infrastructure, “slower uptake … isn’t necessarily our issue,”
Taylor said. “It’s what’s made available to us.”</b></p><p></p><p>He said he
will look at any projects brought forward by the newly created Ontario
Infrastructure Bank, adding that pensions are most interested in
operating assets rather than those under development that will take
years to start throwing cash.</p><p></p><p><b>“We’ve run airports, we’ve
run lotteries, we’ve run a few things of that type. I think we could
show we’ve been a good custodian of important, sometimes politically
sensitive assets,” he said. “So I think we’re well placed to be eligible
to be considered to either co-own or operate those assets
independently.”</b></p><p>Teachers’ posted a ten-year annualized total-fund net return of 7.6 per
cent in 2023 and a 9.3 per cent return since inception. The pension
retained a $19.1 billion preliminary funding surplus and is fully funded
for the eleventh year in a row. <br /></p></blockquote><p>Paula Sambo of Bloomberg also <a href="https://financialpost.com/fp-finance/ontario-teachers-returns-sapped-real-estate-infrastructure-losses" target="_blank">reports</a> real estate, infrastructure losses sap Ontario Teachers' returns:</p><p></p><blockquote><p>Ontario Teachers’ Pension Plan
gained 1.9 per cent last year, underperforming its benchmark by a wide
margin, as strong results in credit and stocks were overshadowed by
losses in hard assets.</p><p><b>The fund lowered its valuation on some infrastructure and property holdings due to <a data-evt-typ="click" data-evt-val="{"control_fields": {"mparticle": {"keys": {"click_source_type": "click_source_type", "anchor_text": "anchor_text", "target_url": "target_url", "layout_section": "layout_section"}, "mp_event_type": "Navigation", "extra_keys": ["click_vertical_position_percentage", "click_vertical_position_pixels"]}}, "click_source_type": "in-page link", "anchor_text": "higher interest rates", "target_url": "https://financialpost.com/tag/interest-rates", "layout_section": "in-page-link"}" data-evt="click" href="https://financialpost.com/tag/interest-rates" rel="noopener noreferrer" target="_blank">higher interest rates</a> and “asset-specific events that negatively impacted select investments,” which it didn’t specify in a statement Tuesday.</b></p><p><b>Ontario Teachers’ underexposure to stocks also weighed on its
returns. That part of the portfolio rose 20 per cent, but the fund has
just 10 per cent of its assets in public equities on a gross basis.</b></p><p></p><p>“While
we advanced key strategic areas of focus in 2023, we did not generate
investment results to desired levels,” chief executive Jo Taylor said in
the statement, adding that the fund had prepared for “a more
challenging economic environment than ultimately transpired.”</p><p>The real estate portfolio declined 5.9 per cent, compared with a two
per cent gain for its benchmark. Infrastructure assets lost 2.8 per
cent.</p><p></p><p><b>Overall, Ontario Teachers’ return trailed its benchmark by nearly seven percentage points</b>.</p></blockquote><p></p><p>Earlier today, Ontario Teachers' Pension Plan issued a <a href="https://www.otpp.com/en-ca/about-us/news-and-insights/2024/ontario-teachers-announces-2023-results/" target="_blank">press release</a> announcing their 2023 results:</p><blockquote><div class="op-rte " data-acdl="text"><ul><li>Achieved a one-year total-fund net return of 1.9%.</li><li><b>Underperformed benchmark return of 8.7% resulting in negative value add of $15.8 billion.</b></li><li><b>Delivered a ten-year annualized total-fund net return of 7.6% and return since inception of 9.3%</b>.</li><li>Retained a $19.1 billion preliminary funding surplus and is fully funded for the 11<sup>th</sup> straight year.</li><li>Reduced portfolio carbon emissions intensity by 39% compared to 2019 baseline and 10% relative to 2022.</li><li>Announced the establishment of an in-house real estate asset class group.</li></ul>
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<p tabindex="0"><strong>TORONTO (March 12, 2024)</strong> -- Ontario
Teachers’ Pension Plan Board (Ontario Teachers’) today announced a
one-year total-fund net return of 1.9% for the year ended December 31,
2023.<sup>1</sup> <b>The net-return for 2023 was driven primarily by strong
returns from public equities and credit, offset by losses in
infrastructure and real estate</b>. Net assets grew to $247.5 billion,
reflecting incremental progress toward a strategic goal to reach $300
billion in net assets by 2030. Investment income of $5.5 billion and
contributions of $3.3 billion for the year were largely offset by
benefits paid of $7.6 billion and administrative expenses of $0.9
billion.</p>
<p tabindex="0"><b>Results reflect underperformance relative to the benchmark return of 8.7% by 6.8%, or $15.8 billion in negative value add<sup>2</sup>. This compares to a total-fund net return of 4.0% in 2022, which beat the benchmark by 1.8% or $4.4 billion in value add.</b></p>
<p tabindex="0"><b>The benchmark underperformance was driven by several
factors, including a relative underexposure in listed equities which
performed strongly through the year as well as valuation adjustments in
the infrastructure and real estate portfolios due to higher interest
rates and asset-specific events that negatively impacted select
investments.</b></p>
<p tabindex="0"><b>The plan is fully funded as at January 1, 2024, with a
$19.1 billion preliminary funding surplus. </b>This marks the plan’s
11th consecutive year being fully funded (meaning plan assets exceed
future pension liabilities), underscoring the plan’s long-term financial
health and stability.</p>
<p tabindex="0"><b>“While we advanced key strategic areas of focus in 2023,
we did not generate investment results to desired levels. This was
largely due to positioning the portfolio for a more challenging economic
environment than ultimately transpired, our relatively lower exposure
to public equities, and valuation adjustments in certain real estate and
infrastructure assets,” said Jo Taylor, President & Chief Executive
Officer. “With that said, we remain fully funded and delivered a
positive return, which are both important financial metrics for our
members. As a pension plan with multi-generational liabilities, our
investment strategy is intentionally designed for stable long-term
returns.”</b></p>
<p class="op-small-text" tabindex="0"><span style="font-size: x-small;"><sup>1</sup> All figures are as at December 31, 2023, and denominated in Canadian dollars unless noted.</span></p>
<p class="op-small-text" tabindex="0"><span style="font-size: x-small;"><sup>2</sup> Value-add is the
amount of return in excess of (below) benchmarks after deducting
management fees, transaction costs and administrative costs allocated to
the Active programs (includes annual incentives but does not include
long-term incentives).</span></p>
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<div class="op-rte " data-acdl="text">
<h2 tabindex="0">Investment performance</h2>
<p tabindex="0">Given the plan’s liabilities stretch decades into the
future, results over longer periods is particularly important. Ontario
Teachers’ has delivered an annualized total-fund net return of 9.3%
since inception in 1990, and five- and 10-year annualized total-fund net
returns of 7.2% and 7.6%, respectively. <br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgE61YARwCBZoC_NkOi9k6ifO_TN6qYsXw9-kR5-dfBZtaYxpFGn1HWAcZ7n2-b091s0BkvPm0F_WIk4iT9JcyP2MTJh_oLIBxaNwyRmUQt125NbFpKqEbTUkUkDL4wdVBB60i9DXxyG9x5-7jS5OiJQ2E4t7Z384jLFf_8vThYjQvUEDgutI6s7pXg2MHk/s840/OTPP%201.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="130" data-original-width="840" height="100" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgE61YARwCBZoC_NkOi9k6ifO_TN6qYsXw9-kR5-dfBZtaYxpFGn1HWAcZ7n2-b091s0BkvPm0F_WIk4iT9JcyP2MTJh_oLIBxaNwyRmUQt125NbFpKqEbTUkUkDL4wdVBB60i9DXxyG9x5-7jS5OiJQ2E4t7Z384jLFf_8vThYjQvUEDgutI6s7pXg2MHk/w640-h100/OTPP%201.jpg" width="640" /></a></div><p></p><p tabindex="0">The table below summarizes Ontario Teachers’ investment returns and
related benchmark returns by investment asset class for the current and
previous year.</p><p tabindex="0"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhvOx4LevWB3bBseldDm8Nmy6DRPNHf5s-cJKZMF0Mzt0Q2fEltNrbJySLksqp8jCxBHTqluuRNuzcCYe9DW5kKxe8LhLVNm5pK3Tq0M9g7_4cZV4l3kM56H3AtYRx0Z5nzsf0uk9qjPq_xTYfaga3kG65ArXK2lhmaLJp54gKMiDpjadlP1qA6a8VPxOj-/s812/OTPP2.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="812" data-original-width="567" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhvOx4LevWB3bBseldDm8Nmy6DRPNHf5s-cJKZMF0Mzt0Q2fEltNrbJySLksqp8jCxBHTqluuRNuzcCYe9DW5kKxe8LhLVNm5pK3Tq0M9g7_4cZV4l3kM56H3AtYRx0Z5nzsf0uk9qjPq_xTYfaga3kG65ArXK2lhmaLJp54gKMiDpjadlP1qA6a8VPxOj-/w446-h640/OTPP2.jpg" width="446" /></a></div><p></p><div class="op-rte " data-acdl="text">
<p class="op-small-text" tabindex="0"><span style="font-size: x-small;"><sup>3</sup> The total-fund
net return is calculated after deducting transaction costs, management
fees and investment administrative costs. Asset-class returns are
calculated before deducting investment administrative costs.</span></p>
<p class="op-small-text" tabindex="0"><span style="font-size: x-small;"><sup>4</sup> Effective January 1,
2023, the Innovation asset class is included in Equity - Venture growth
and is benchmarked to an active benchmark. Previously, Venture growth
was benchmarked to its actual return during an initial incubation
period. Prior period returns for Equity and Credit have not been
restated.</span></p>
</div>
The table below summarizes Ontario Teachers' portfolio mix by asset class for the current and previous year.</div><div class="op-rte " data-acdl="text"><p tabindex="0"> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg9FNCeIj93FA0eD3DB2gHCODXJeYxQkPaAXBkKvOOdDY3a4em3SVLrTCCUaQTK2ONpwGbs6-KZUGuJHePGenrkYQqpM6OwUlwQ4SnC-gzVGfiLKoKSGcXf1s-TZoLuyYWY2LSvLVoc526lPeCMDo9A9g9uEg6TCjJMV9mhsza1rsR92Utv5BSdXbjSePwf/s671/OTPP3.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="671" data-original-width="425" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg9FNCeIj93FA0eD3DB2gHCODXJeYxQkPaAXBkKvOOdDY3a4em3SVLrTCCUaQTK2ONpwGbs6-KZUGuJHePGenrkYQqpM6OwUlwQ4SnC-gzVGfiLKoKSGcXf1s-TZoLuyYWY2LSvLVoc526lPeCMDo9A9g9uEg6TCjJMV9mhsza1rsR92Utv5BSdXbjSePwf/w406-h640/OTPP3.jpg" width="406" /></a></div><p></p><div class="op-rte " data-acdl="text">
<p class="op-small-text" tabindex="0"><span style="font-size: x-small;"><sup>5</sup> Effective January
1, 2023, investments of $7,438 million formerly included in the
Innovation asset class are now included in Equity - Venture growth
($7,331 million) and Credit ($107 million) asset classes.</span></p>
<p class="op-small-text" tabindex="0"><span style="font-size: x-small;"><sup>6</sup> Includes funding for
investments (term debt, bond repurchase agreements, implied funding from
derivatives, unsecured funding, and liquidity reserves) and overlay
strategies that manage the foreign exchange risk for the total fund.</span></p>
<p class="op-small-text" tabindex="0"><span style="font-size: x-small;"><sup>7</sup> Comprises investments
less investment-related liabilities. Total net assets of $247.5 billion
at December 31, 2023 (2022 – $247.2 billion) include net investments
and other net assets and liabilities of $3.6 billion (2022 – $3.1
billion).</span></p>
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<div class="op-rte " data-acdl="text">
<h3 tabindex="0">Impact of currency on returns<br />
</h3>
<p tabindex="0"><b>In 2023, the fund experienced a foreign currency loss of
$2.2 billion as assets denominated in foreign currencies depreciated in
value when converted back into Canadian dollars. This corresponds with a
negative impact from currency on our total-fund net return of
0.8%.</b> <b>This loss was primarily driven by the depreciation of the US
dollar compared to the Canadian dollar.</b> The fund’s net exposure to the
US dollar is significantly larger than any other foreign currency.</p>
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<h3 tabindex="0">Volatility management<br />
</h3>
<p tabindex="0">Considerable attention is paid to managing volatility of
returns alongside other growth metrics. Volatility is a common way of
measuring risk or uncertainty. CEM Benchmarking, a market leader in
analyzing performance and cost data, measures risk-adjusted returns of
289 pension plans from all over the world.<b> CEM assesses Ontario
Teachers’ to be a top performer when it comes to risk-adjusted returns
over a 10-year period ending December 31, 2022<sup>8</sup>, placing us
in the 100th percentile compared to a peer group of 18 Canadian and
global plans suggested by CEM as similar to Ontario Teachers’ in size.<sup>9</sup></b></p>
<p tabindex="0">Ontario Teachers’ has a Sharpe ratio of 2.01 over the
past 10 years versus our peer group median of 0.80. A higher Sharpe
ratio signifies higher returns with lower volatility when comparing
portfolios.<br />
</p>
<p class="op-small-text" tabindex="0"><span style="font-size: x-small;"><sup>8</sup> CEM Benchmarking
study is dated December 31, 2022. This is necessary to include
comparable data for all funds from 2022, the most recent year where all
return data is available given funds report with different year-end
dates.</span></p>
<p class="op-small-text" tabindex="0"><span style="font-size: x-small;"><sup>9</sup> CEM Benchmarking
utilizes the Sharpe ratio to assess risk-adjusted return, which is
calculated using the 10-year net return, less the 10-year risk-free
rate, divided by the standard deviation of excess return. The Sharpe
ratio is a commonly used method of comparing the return of an investment
with its risk.</span><br />
</p>
</div>
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<h2 tabindex="0">Investment highlights<br />
</h2>
<p tabindex="0"><b>Ontario Teachers’ manages approximately 80% of its
assets internally,</b> with a focus on deploying capital into active
strategies around the world. Investment highlights in 2023 include:</p>
<h3 tabindex="0">Equities</h3>
<ul><li>Acquired a majority stake in Sevana Bioenergy LLC and made a
capital commitment to develop renewable natural gas projects across
North America.</li><li>Invested in 7IM, a leading UK wealth manager that excels in technology-driven wealth and investment solutions.</li><li>Supported
BroadStreet Partners Inc. in their acquisition of Westland Insurance,
one of the largest independent insurance brokers in Canada.</li><li>Entered
an agreement to sell an equity stake in SeaCube Container Leasing Ltd.,
one of the world's largest operating lessors of intermodal containers.</li><li>Entered
a definitive agreement to sell Shearer’s Foods, a leading contract
manufacturer and private label supplier serving the snack industry in
North America.</li></ul>
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<h3 tabindex="0">Infrastructure & Natural Resources</h3>
<ul><li>Acquired a significant equity ownership position in Diamond
Communications, one of the largest privately held U.S. wireless
communications infrastructure platforms.</li><li>Acquired a 25% equity stake in Sweetwater Royalties, a base metals, industrial minerals and renewable energy royalty company. </li><li>Acquired a significant majority stake in GreenCollar, a leading Australian environmental markets platform.</li></ul>
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<h3 tabindex="0">Real Estate<br />
</h3>
<ul><li>Acquired a co-control position in Compass Datacenters, a company
that designs and constructs data centres for some of the world’s
largest hyperscalers and cloud providers.</li><li>Acquired a significant
majority stake in Lincoln Property Company’s Residential Division to
support and grow multifamily property across the United States. The
company was subsequently rebranded as Willow Bridge Property Company.</li><li>Through our real estate joint venture with Boreal IM, acquired logistics assets in France, Spain, Italy, and Germany.</li></ul>
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<div class="op-rte " data-acdl="text">
<h3 tabindex="0">Teachers’ Venture Growth<br />
</h3>
<ul><li>Invested in Xpressbees, one of India’s market-leading and fastest-growing third-party end-to-end logistics platforms.</li><li>Participated
in the latest funding round for Databricks, the world’s leading
lakehouse platform on the cloud that unifies data, analytics, and
artificial intelligence.</li></ul>
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<h3 tabindex="0">Corporate news</h3>
<ul><li>After year-end, announced the appointment of Stephen McLennan
and Gillian Brown, two longstanding Ontario Teachers’ leaders, as Chief
Investment Officers focused on portfolio construction and alpha
generation, respectively. Gillian Brown was appointed Chief Investment
Officer, Public & Private Investments and Stephen McLennan was
appointed Chief Investment Officer, Asset Allocation.</li><li>Also
following year-end, announced the appointment of Jonathan Hausman as
Chief Strategy Officer, a newly established, cross-enterprise strategy
role. Jonathan joined Ontario Teachers’ in 2004 and has led Global
Investment Strategy (GIS) since 2017.</li><li>Appointed Pierre Cherki as
Executive Managing Director, Real Estate, a new investment leadership
position that oversees the newly established in-house real estate team.</li><li>Alongside
Cadillac Fairview (CF), announced an evolution to our real estate
operating model that will see the establishment of an in-house real
estate asset class group at Ontario Teachers’. This aligns the real
estate investment approach to that of other asset groups, where
investment capabilities are embedded within Ontario Teachers’ to enable
information sharing, co-sourcing, and best practices across geographies.
Moving forward Ontario Teachers’ will focus on global real estate
investing and portfolio management, while CF will focus on growth,
diversification, and densification of its real estate portfolio in
Canada.</li><li>Appointed Bruce Crane as Executive Managing Director,
Asia-Pacific. Bruce joined Ontario Teachers’ in 2020 and most recently
led the Infrastructure & Natural Resources team in Asia-Pacific.</li></ul>
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<h2 tabindex="0">Climate ambition</h2>
<p tabindex="0">As part of its journey to achieve net zero on its
investment activities by 2050, <b>Ontario Teachers’ has established
industry-leading interim targets to reduce portfolio carbon emissions
intensity<sup>10</sup> by 45% by 2025 and 67% by 2030, compared to its
2019 baseline</b>. At the end of 2023, Ontario Teachers’ has reduced
portfolio carbon emissions intensity by 39% compared to our 2019
baseline and 10% relative to 2022. This reduction is primarily driven by
an increase in market value of assets and a decrease in absolute
emissions of our portfolio carbon footprint.</p>
<p tabindex="0"><b>In 2023, Ontario Teachers’ wholly owned subsidiary,
Ontario Teachers’ Finance Trust (OTFT), issued its fourth green bond
with the $1 billion in proceeds being invested in companies or assets
that enable the net-zero transition, reduce emissions, and build a
sustainable economy. Net proceeds from OTFT’s green bond issuances are
fully allocated to eligible green assets in our portfolio</b>.<br />
</p>
<p class="op-small-text" tabindex="0"><span style="font-size: x-small;"><sup>10</sup> For further information on our methodologies, please see page 151 of our Annual Report.</span></p>
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<h2 tabindex="0">Investment costs</h2>
<p tabindex="0">Ontario Teachers’ is committed to cost-effectiveness and
links costs to the investment value creation process. Total investment
costs, including administrative expenses, transaction costs, and
external management fees, totaled $1,855 million (75 cents per $100 of
average net assets) in 2023, compared to $1,886 million (78 cents per
$100 of average net assets) in 2022. The decrease in investment costs
compared to the previous year is largely due to lower transactions
driven by a decrease in mergers and acquisitions activity during the
year, partially offset by a small increase in administrative expenses.</p>
<p tabindex="0"><em>Note to Editors: To read our annual report, please <a href="https://www.otpp.com/en-ca/about-us/our-results/annual-reporting/" title="OTPP 2023 Annual Report ">click here</a>.</em></p>
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<h2 tabindex="0">About Ontario Teachers’</h2>
<p tabindex="0">Ontario Teachers' Pension Plan Board (Ontario Teachers')
is a global investor with net assets of $247.5 billion as at December
31, 2023. We invest in more than 50 countries in a broad array of assets
including public and private equities, fixed income, credit,
commodities, natural resources, infrastructure, real estate and venture
growth to deliver retirement income for 340,000 working members and
pensioners.</p>
<p tabindex="0">Our more than 450 investment professionals operate in
key financial centres around the world and bring deep expertise in a
broad range of sectors and industries. We are a fully funded defined
benefit pension plan and have earned an annual total-fund net return of
9.3% since the plan's founding in 1990. At Ontario Teachers', we don't
just invest to make a return, we invest to shape a better future for the
teachers we serve, the businesses we back, and the world we live in.
For more information, visit <a href="https://www.otpp.com/en-ca/" title="otpp.com ">otpp.com</a> and follow us on <a href="https://linkedin.com/company/otpp/" target="_blank" title="Visit website linkedin.com (opens in new window)">LinkedIn</a>.</p></div></div></div></div></div></div></blockquote><div class="op-wrapper op-margin-top--lg
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"><div><div class="op-rte " data-acdl="text"><p tabindex="0"></p>
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</div><p tabindex="0">Please take the time to download and read OTPP's 2023 annual report <a href="https://www.otpp.com/en-ca/about-us/our-results/annual-reporting/" target="_blank">here</a>. </p></div></div></div><p>Earlier today, I had a conversation with CEO Jo Taylor and want to thank him for taking the time to talk to me as it was a fruitful discussion.</p><p>I also want to thank Dan Madge for reaching out to set up the call and for sending me material beforehand on an embargoed basis, helped me better prepare.</p><p>Now, before I get to my discussion with Jo, a few more items.</p><p>First, take the time to read Chair Steve McGirr's message:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiLH9nOp_ZxP7jNX8Jtt2lNZortoWB9u_T37pfZyNSnn4xiNvSFpCEFDKRt3ZX-vrEKzK5qRhf_BNKB0plXD_zMj4Fz5edSdnYeyOj1j3G1U3vZPjy2yLeFGb6DtmjCUXzRAwfZfs2PUk6mvUg1M_CSDsDwgCvm2AF93r2ieVCTBm2Bv6JcyES7_nX5DL__/s863/OTPP-Chair1.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="863" data-original-width="731" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiLH9nOp_ZxP7jNX8Jtt2lNZortoWB9u_T37pfZyNSnn4xiNvSFpCEFDKRt3ZX-vrEKzK5qRhf_BNKB0plXD_zMj4Fz5edSdnYeyOj1j3G1U3vZPjy2yLeFGb6DtmjCUXzRAwfZfs2PUk6mvUg1M_CSDsDwgCvm2AF93r2ieVCTBm2Bv6JcyES7_nX5DL__/w542-h640/OTPP-Chair1.jpg" width="542" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgHZxAQh2e_a0oYf8HUcViFnPwIkUf5q9Ow5lYSG8wOMoC6QsYPoJHVYDRqDO1-yVi7-hQ7ImVYp9L_O9C-2xlVhzbEk2PKcRbn6nBGUUeSEGOcGbW2dOpsKJ_gfjRk09tYnNbXlz62V-uevwjxxhbc8tUL8ekN9NWzRr0w5Bm5IyzqnfAKvHf-T_fjUKu5/s685/OTPP-Chair2.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="685" data-original-width="628" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgHZxAQh2e_a0oYf8HUcViFnPwIkUf5q9Ow5lYSG8wOMoC6QsYPoJHVYDRqDO1-yVi7-hQ7ImVYp9L_O9C-2xlVhzbEk2PKcRbn6nBGUUeSEGOcGbW2dOpsKJ_gfjRk09tYnNbXlz62V-uevwjxxhbc8tUL8ekN9NWzRr0w5Bm5IyzqnfAKvHf-T_fjUKu5/w586-h640/OTPP-Chair2.jpg" width="586" /></a></div><p>Second, take the the time to read CEO Jo Taylor's message:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjDPi9LX_BJtc5lPPSoDnw7VclbrX25ySgdJq1LerP2sHgqd7p69gUy6-yL7mUdfZqBKYpOeu07LxVUSRQdf4VviUBHxtiPbwHqtlt3II_4XSmdNhYpRfMcLeZaHrIQSmW2thOzOxM9naYSNCqcgfF1wrpY7Hep0-rYdKiAn7RELsh6CRfj2LZmMOuTskex/s875/OTPP_CEO1.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="875" data-original-width="738" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjDPi9LX_BJtc5lPPSoDnw7VclbrX25ySgdJq1LerP2sHgqd7p69gUy6-yL7mUdfZqBKYpOeu07LxVUSRQdf4VviUBHxtiPbwHqtlt3II_4XSmdNhYpRfMcLeZaHrIQSmW2thOzOxM9naYSNCqcgfF1wrpY7Hep0-rYdKiAn7RELsh6CRfj2LZmMOuTskex/w540-h640/OTPP_CEO1.jpg" width="540" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiIRY6TuSxNtAAcB3I5qn_GyRyaPFS01PifLdLpeZQt_0jzBNbjME7Yk6co_F8OFdXU9EJBdVO8Q_yMV8E_0Zeps6SveuCRr1AbzDvZQyrvCzuvAsvaQyL5CNG8Wf7oBfTFwjcy0_tDSrFDfrbR3sBKKjTcfQ_6sFpaWJyIOer0FgHx3UPeF6UXp7QPfY09/s823/OTPP_CEO2.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="823" data-original-width="631" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiIRY6TuSxNtAAcB3I5qn_GyRyaPFS01PifLdLpeZQt_0jzBNbjME7Yk6co_F8OFdXU9EJBdVO8Q_yMV8E_0Zeps6SveuCRr1AbzDvZQyrvCzuvAsvaQyL5CNG8Wf7oBfTFwjcy0_tDSrFDfrbR3sBKKjTcfQ_6sFpaWJyIOer0FgHx3UPeF6UXp7QPfY09/w490-h640/OTPP_CEO2.jpg" width="490" /></a></div><p>I note the following on appointments:</p><p></p><blockquote><p>Since last year’s annual report, there have been a number of changes to our senior team. Our Chief Investment Officer, Ziad Hindo, left the organization after more than 20 years. We thank Ziad for his many contributions.</p><p><b>I took time to reflect on the CIO role, given its demands and complexity</b>. Earlier this year, I announced a change in our leadership model in Investments, appointing Gillian Brown and Stephen McLennan as our new CIOs. This approach will share responsibility between two accomplished and long-serving investors and enable us to sharpen our capital allocation focus moving forward.</p><p><b>We established a Chief Strategy Officer role and appointed Jonathan Hausman, with a mandate to lead an enterprise-wide approach to advance our strategic objectives.</b> Nick Jansa, who leads investment activities in Europe, Middle East and Africa, has joined our Executive Team on a permanent basis to ensure that international perspectives are formally embedded in all our discussions at the most senior level.</p><p><b>We elevated Bruce Crane to head our activities in Asia-Pacific, taking over from Ben Chan who had served the region admirably for five years. </b>Asia-Pacific is an important investment area for the fund, and Bruce will look to optimize our returns from our teams in Singapore, Hong Kong and Mumbai. These internal appointments show the strength that we have at Ontario Teachers’ in our senior team and reinforce a strong commitment to developing our people.</p><p><b>We also announced a revised approach for real estate investing (see page 77) and appointed Pierre Cherki to head up our new in-house real estate team</b>. Our returns in real estate have not been good enough in recent years. We believe taking a more active role in our investment activities there, as we do in other asset groups, will allow us to strengthen and diversify this portfolio.</p></blockquote><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOhLsjnPsnOvjZycwdeqSI7bfyYDeIo9IKu1IbanpTk5BgaLSYCrVVZjaiwYngT6gk63N4LANhezchWrpoFvO20B0_yLuPUwyoSOK-EwRkvGMeKAsUCF0qryt3M36tgxU1ZbuqlEf9yejN0l9s0AzNL-9NW9dmJoszeLlq_8OIgtlX9jle_Q913dkrGUes/s856/OTPP%20leadership%20team.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="808" data-original-width="856" height="378" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOhLsjnPsnOvjZycwdeqSI7bfyYDeIo9IKu1IbanpTk5BgaLSYCrVVZjaiwYngT6gk63N4LANhezchWrpoFvO20B0_yLuPUwyoSOK-EwRkvGMeKAsUCF0qryt3M36tgxU1ZbuqlEf9yejN0l9s0AzNL-9NW9dmJoszeLlq_8OIgtlX9jle_Q913dkrGUes/w400-h378/OTPP%20leadership%20team.jpg" width="400" /></a></div><br />That brings me to the Q&A with CIOs Gillian Brown and Stephen McLennan:<p></p><p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEin3_a7bd1nLaXhwNJ63fETzWjp1VsLkw415yqZRFqrA0H1sNOEf4WBaMy2FijzU_ToP9Z9zmcnFV5iqbhgESp-4fTfhukdIo0BryH5YAWQ4UzQksndSLy_bFEakYHN-uM0roWhIl3KqfbpjMVpo8-nQNjndoFK3GNDjYNdcZK_yNLvfK_TP5ZyuHiJqevu/s870/OTPP-CIOs1.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="870" data-original-width="734" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEin3_a7bd1nLaXhwNJ63fETzWjp1VsLkw415yqZRFqrA0H1sNOEf4WBaMy2FijzU_ToP9Z9zmcnFV5iqbhgESp-4fTfhukdIo0BryH5YAWQ4UzQksndSLy_bFEakYHN-uM0roWhIl3KqfbpjMVpo8-nQNjndoFK3GNDjYNdcZK_yNLvfK_TP5ZyuHiJqevu/w540-h640/OTPP-CIOs1.png" width="540" /></a></div><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhMpx8753goT-nGx4IDfzKpx12CMnpmN7u3RSLToEN9IjVUxmCeh4Jq8ZGqwre-DvsaM7AEwEN_-GQ6nkaXKndHdUIwbgYxhzK0i4JE-PD5p4pPbtBss2zH3_q0hrjO5KS-kLb2KRTvniZ7I5XssDO4LNwLdyBf7jTuZOEaYXl6i9-OVAaV35yK0DksPoQV/s665/OTPP-CIOs2.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="665" data-original-width="636" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhMpx8753goT-nGx4IDfzKpx12CMnpmN7u3RSLToEN9IjVUxmCeh4Jq8ZGqwre-DvsaM7AEwEN_-GQ6nkaXKndHdUIwbgYxhzK0i4JE-PD5p4pPbtBss2zH3_q0hrjO5KS-kLb2KRTvniZ7I5XssDO4LNwLdyBf7jTuZOEaYXl6i9-OVAaV35yK0DksPoQV/w612-h640/OTPP-CIOs2.jpg" width="612" /></a></div><p>Both Gillian and Stephen are very experienced and very competent, it was actually a smart move to split the CIO job in two to focus on asset allocation (Stephen's role) and strategies/ manager selection across public and private markets (Gillian's role).</p><p>These are NOT easy jobs, far from it, and both are critically important. Most of returns come from asset allocation but if you don't pick right strategies and managers and add value, you're not going far.</p><p>And as Jo told me earlier today, Teacher's is a mature pension plan, there is little room for big errors as they cannot afford big downside risks.</p><p>You might have noticed the press release discussed their risk-adjusted returns over the long run:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiz8vTF27ieOjo8bhn2_PGArtqPi1QWkNQsK0wI7ts8Lzlvhx3qTf7V70HWph2KL1U2jVDo5cq4YVFdNYu3mXuHeYCFjCjSjjMSqKi2fwbfCeUNqQKyJEHsQpHLvm6FwfO5iwC2RQL7FCmBCr0DalN-vDH9wJYxGPAzV709e9-pJcFS-OuxDhM8CgOyZ0NV/s415/OTPP-%20risk%20adj%20returns.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="205" data-original-width="415" height="198" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiz8vTF27ieOjo8bhn2_PGArtqPi1QWkNQsK0wI7ts8Lzlvhx3qTf7V70HWph2KL1U2jVDo5cq4YVFdNYu3mXuHeYCFjCjSjjMSqKi2fwbfCeUNqQKyJEHsQpHLvm6FwfO5iwC2RQL7FCmBCr0DalN-vDH9wJYxGPAzV709e9-pJcFS-OuxDhM8CgOyZ0NV/w400-h198/OTPP-%20risk%20adj%20returns.jpg" width="400" /></a></div><p></p><p>Clearly Teachers' is very risk conscious, it needs to be given the demographics of its plan are older, it needs to manage liquidity risk and other risks tightly.</p><p>I do not read too much into risk-adjusted returns, however, because every pension plan/ fund is different and some can and should take more risks.</p><p>And as Jo told me earlier, even Teachers' might need to modify its risk-taking going forward.</p><p>Alright, let me jump into my discussion with Jo Taylor.</p><p><b>Discussion with OTPP CEO Jo Taylor</b></p><p>I always enjoy talking to Jo, he's very nice, bright and straightforward, doesn't shy away from answering tough questions.</p><p>I began by noting that looking at the asset mix, bonds, real estate and infrastructure make up 63% of total assets: <br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhLUcsi7qFuNDRQqRD5MpB-Uj-Q4i3bL3ko9AAkfJmZwut8nDMP7yOIB3jlImSZrUdXYVTKT5QFFboy9sNeb4wEjkkZrTTKc1xQJTlFVa5l-9L7-Bq0b6a4olg9dcX6WbKQDLYYW2J6YHTDKBbtaSN-v7lq6RnCUZvniu14onV2k8yO_eh88yxvZeyIUN-G/s883/OTPP%20-%20detailed%20asset%20mix.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="883" data-original-width="859" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhLUcsi7qFuNDRQqRD5MpB-Uj-Q4i3bL3ko9AAkfJmZwut8nDMP7yOIB3jlImSZrUdXYVTKT5QFFboy9sNeb4wEjkkZrTTKc1xQJTlFVa5l-9L7-Bq0b6a4olg9dcX6WbKQDLYYW2J6YHTDKBbtaSN-v7lq6RnCUZvniu14onV2k8yO_eh88yxvZeyIUN-G/w622-h640/OTPP%20-%20detailed%20asset%20mix.jpg" width="622" /></a></div><p>I also noted the weakness in real estate didn't surprise me as challenges in that asset class are widespread but what did surprise me somewhat was the underperformance of infrastructure, contributing to the 6.8% underperformance to their benchmark:</p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgAFDtzI4RyZUXhL9vdru7m20IcwjpvMOAYusboGVKX4qArTzZGkDHTIyZbovCXQiSuC0EglEwasx57qFfI3lUeKc9MCwYOs_-Tr9GrspUh8Eapyb2ajXcKQfuYiTL5aUw8Ra2BUx_WL2Phb_ITQMXnZiDkZ_zqjsHvuF_9xZnBpX6F1H5pqyGtDdP7RYOJ/s843/OTPP%20-%20Total%20fund%20performance.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="264" data-original-width="843" height="200" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgAFDtzI4RyZUXhL9vdru7m20IcwjpvMOAYusboGVKX4qArTzZGkDHTIyZbovCXQiSuC0EglEwasx57qFfI3lUeKc9MCwYOs_-Tr9GrspUh8Eapyb2ajXcKQfuYiTL5aUw8Ra2BUx_WL2Phb_ITQMXnZiDkZ_zqjsHvuF_9xZnBpX6F1H5pqyGtDdP7RYOJ/w640-h200/OTPP%20-%20Total%20fund%20performance.jpg" width="640" /></a></div><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiUSTKL249eKsMqg2mBN6PbPEetH5nYefCPf-U3l4BtfzWOsMMScz_cZFWUy6ezH2wG-CX5QVToqoMcx7pkt_V3EMGN_9iSKPg07vDoA95mdaTbHlwiBkPqH-OIT3K4uIbiSLYLLfrcdZdkq8EOHPC9RPjxMAbmpXHtBe9N92u7hvBwQElMBmg7x_Jw-cO5/s843/OTPP%20-2023%20performance%20by%20asset%20class.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="831" data-original-width="843" height="630" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiUSTKL249eKsMqg2mBN6PbPEetH5nYefCPf-U3l4BtfzWOsMMScz_cZFWUy6ezH2wG-CX5QVToqoMcx7pkt_V3EMGN_9iSKPg07vDoA95mdaTbHlwiBkPqH-OIT3K4uIbiSLYLLfrcdZdkq8EOHPC9RPjxMAbmpXHtBe9N92u7hvBwQElMBmg7x_Jw-cO5/w640-h630/OTPP%20-2023%20performance%20by%20asset%20class.jpg" width="640" /></a></div><p>Again, <span data-contrast="auto">real estate and infrastructure returned negative 5.9%
and negative 2.8%, well off of the benchmarks of 2% and 7.6%,
respectively. These two assets comprise 12% and 16% of the portfolio.</span></p><p>Jo Taylor responded:</p><p></p><blockquote><p>Let me just touch briefly on real estate. We still have a high exposure to retail and office. Our Cadillac Fairview portfolio in Canada is performing operationally well, some good occupancy levels, thoughtful of new capital deployed which is densification of new sites or completing ones we already have in progress. And I would say the area we've been more focused on is international real estate. We are bringing people in-house and we want to make sure that gives us a better balance in our real estate portfolio by sector and geography. We are also moving away from things that are in development to assets that are operational. </p><p>Not an easy market, we brought in Pierre Cherki who was one of the board members at CF to run our (new in-house) real estate team, he's a good guy, he's getting his feet under the desk essentially to give us a better idea of where he wants to go with real estate and we will figure out together what level of capital should get allocated.</p></blockquote><p>I then noted that 35% of the assets are in Canada and asked him if most of those Canadian assets -- like 90% -- are in fixed income and real estate:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjTCpBbYk9zXJWDyNUO6mmkde3Ji0ePO68g6ashxhq7YsFADXPJDGFBBgFK_pQOmZIY8KoOc_0rPKBbt0VQUDloYdwDv4OvMqAE9Zyh6ywf2eTmZxge4SnggsIs8xTK5ykbrZWy3rttSEotxAZubdt3z-eeRxVjHqvph-VG8_UZfwr586DxUiVuEUFj5LY5/s849/OTPP%20-%20gross%20assets%20bu%20geography.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="580" data-original-width="849" height="438" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjTCpBbYk9zXJWDyNUO6mmkde3Ji0ePO68g6ashxhq7YsFADXPJDGFBBgFK_pQOmZIY8KoOc_0rPKBbt0VQUDloYdwDv4OvMqAE9Zyh6ywf2eTmZxge4SnggsIs8xTK5ykbrZWy3rttSEotxAZubdt3z-eeRxVjHqvph-VG8_UZfwr586DxUiVuEUFj5LY5/w640-h438/OTPP%20-%20gross%20assets%20bu%20geography.jpg" width="640" /></a></div><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFDZOmZw4dqf2JV59ssHuJhC0SevEPgZfnmoWeGVnB2vi9O9K1zWCBcfXiMhEfwJh6NJFDGI6TotDorAu5KBKyxbXEmOcrw5SGWPECOJqmDs4F8VDKqFoc37uTVEr5hQ5fWNgK0TolNpUudlLt4RnVhgrs96g-d92d0FrJcNzo87cb4QbcbjrTmP889-sd/s882/OTPP%20-%20investing%20in%20Canada.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="882" data-original-width="736" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFDZOmZw4dqf2JV59ssHuJhC0SevEPgZfnmoWeGVnB2vi9O9K1zWCBcfXiMhEfwJh6NJFDGI6TotDorAu5KBKyxbXEmOcrw5SGWPECOJqmDs4F8VDKqFoc37uTVEr5hQ5fWNgK0TolNpUudlLt4RnVhgrs96g-d92d0FrJcNzo87cb4QbcbjrTmP889-sd/w534-h640/OTPP%20-%20investing%20in%20Canada.jpg" width="534" /></a></div><p></p><p>Jo was quick to correct me, stating it's "more broadly based than that," adding:</p><p></p><blockquote><p>Between those two products, we probably have $50 billion of the $100 billion invested in Canada. The rest in private equity, we also have a decent amount in infrastructure, commodities and some other activities.</p><p>It's pretty well spread across the whole of our portfolio. As I continuously say, not only do we have a decent amount of exposure to Canada as it exists today but also when we talk to our investment team, they anticipate a high level of investment into Canada over the next two or three years. If you look at our private equity and real estate portfolios, that's probably going to be $15 billion going into Canada.</p></blockquote><p></p><p>I said that's very interesting because former CEOs of OTPP joined other former CEOs of Maple Eight pensions to write an op-ed in the Globe and Mail warning governments <a href="https://www.theglobeandmail.com/business/commentary/article-dont-meddle-with-canadas-pension-plan-model/" target="_blank">not to meddle with Canada's pension-plan model</a> (more on that later this week).</p><p>I told Jo there's been a lot of criticism against the Maple Eight that they're not investing enough in Canada but he's telling me that Canada will remain an important geography even if OTPP is keeping the international focus.</p><p>Jo replied:</p><p></p><blockquote><p>The really simple scenario is we have 35% of our portfolio in Canada, the same in the US and the other 30% spread around Europe (17%), Asia Pacific (7%) and Latin America (6%).</p><p>That to me represents a good balance in the portfolio in terms of what Canada comprises for a large, mature pension plan investing internationally. Should it be a lot more than 35%? I don't know but I think we have a good allocation there. </p><p>Why wouldn't I invest in Canada, to be honest Leo? I don't take foreign exchange risks, I make good rates of return, so when we find good projects here, we are generally enthusiastic to collaborate with government entities on infrastructure or look at projects that are available in some of our other asset classes.</p><p>For me, we are just carrying on, the debate can rage but for us we have plenty of good data to say we are pretty active investors and we created lots of wealth and jobs in our own country.</p></blockquote><p></p><p>Jo then moved on to discuss the issues in infrastructure:<br /></p><p><b></b></p><blockquote><p>If you go back to 2022, our infrastructure team did really well delivering about a 20% return. To some extent, we looked at those assumptions on valuations, whether our discount rate assumptions based on the rise in interest rates and we thought we had to make an adjustment there. We are about 60 basis points off our discount rate assumptions. We are pretty much the only organization that I know of that has done that and typical of Teachers', we try to be prudent and that took a bite out of the valuations and performance for the infrastructure team.</p><p>The other thing we had were a couple of issues where they're either an ongoing issue with Covid implications or faced regulatory changes on a utility we didn't anticipate and had to make an adjustment to the specific valuation of that asset. So you add all that up together and <b>I think we got a bit of an artificial hit that year on our run rate for our infrastructure portfolio. But what I will say to you is we like the portfolio we have, it's made great returns over many years</b>, we still see it as an important product for us, we've got a great team looking to pick up the right opportunities. The sector has garnered a lot of attention and when that happens, <b>pricing gets tighter so we have to be a bit more thoughtful about what we do.</b></p></blockquote><p><b></b></p><p>I completely agree and mentioned to Jo there's increased regulatory scrutiny in Australia, the US and even discussions at the Canadian government on how private markets are being valued at pensions so it's nice to see Teachers' being very conservative in how it values these assets.</p><p>Jo responded:</p><p></p><blockquote><p>A couple of things. If you go back to 2022, we took cap rates in real estate up by 100 basis points before anyone else did, and we added another 25 basis points in 2023. We are normally early and progressive about adjusting values where we think that ought to happen. </p><p>The other thing is our discount rate for the plan overall at 2.55%, it's still relatively low by international pension plan assumptions, and with that we are still well funded at 107% and gives us confidence we are at a good place in terms of the base to move forward with.</p></blockquote><p></p><p>Indeed, the funded status remains exceptionally strong at Teachers' providing a great base:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj34QbGK7g_ocFCjN4aHZdLXGcb1Ruwx1z-Yg4om0Mx1wwb4Cl9ySG5qH4XOWBjfEx_eCLe8vLLM_zdXNqs576gw027nou-SGK9UPH8NbCOymgYgsvY5TiJ6H400K3qDiF45nQD7HfYeNi3tda1H4CAMNV-VGa4OD-4Dkmq4TZkO_-qql_SMqpcwOzl4cJu/s841/OTPP%20-%20funding%20highlights.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="571" data-original-width="841" height="434" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj34QbGK7g_ocFCjN4aHZdLXGcb1Ruwx1z-Yg4om0Mx1wwb4Cl9ySG5qH4XOWBjfEx_eCLe8vLLM_zdXNqs576gw027nou-SGK9UPH8NbCOymgYgsvY5TiJ6H400K3qDiF45nQD7HfYeNi3tda1H4CAMNV-VGa4OD-4Dkmq4TZkO_-qql_SMqpcwOzl4cJu/w640-h434/OTPP%20-%20funding%20highlights.jpg" width="640" /></a></div><p></p><p>I then moved up to private equity where I noted cost of financing is up, labor costs are up and margins are being squeezed and pretty much all big pension funds are seeing lower returns there.</p><p>I also asked him about fixed income where they noted in the annual report that volatility in yields impacted returns and I asked him specifically if they took too much duration risk and got caught after mid-year until the end-of-year rally in long bonds.</p><p>Jo responded:</p><p></p><blockquote><p>Teachers' approach to fixed income is a bit different than our peers. We tend to take more of a derivative or future exposure to acquiring bond product so we don't actually own all of the fixed income product you see on the balance sheet.If you look at the fixed income return of 1.5%-2%, that's really just the interest rate spread. It's good for us in that we are more flexible in terms of moving around the duration curve. We did that ok last year and the year before, <b>we certainly avoided making significant losses in fixed income than some of our peers</b>. We try to do that because we are a mature plan and can't allow fixed income to take a big bite out of our performance.</p><p>To me the big challenge in fixed income is where does it sit in your portfolio as a product and how much of it do you want as exposure? We have about $85 billion in fixed income at the end of 2023. To me, that's about right and I wouldn't want increase leverage in the plan to get more of it. You will probably see fixed income tracking fairly flat going forward and that's very different from the past when we took fixed income all the way down when rates came down to zero. I think we are now in a world where we will leave it around the same size of where we have it today. </p></blockquote><p></p><p>The key there is inflation expectations, I told him is see inflation stickiness persisting and asked him how their private debt portfolio is ramping up as part of the Credit portfolio.</p><p>Jo responded:</p><p></p><blockquote><p>Credit did do well, made about 9% which is what we wanted it to do. As you've seen we increased it as a proportion of our portfolio. Private debt, we are building up our activity, we brought in some teams in London and Toronto to do that. Sometimes we are picking the credit slices of a transaction over the equity component. We can play in both areas which is sometimes helpful. We think the risk-adjusted returns are better on the credit piece.</p><p><b>The thing you always have to remember with credit is that it's a relatively cyclical product and I think we are in the middle of a cycle which will not last forever.</b> I think at some point, credit opportunities will wane from where they've been and rates of return on credit will start to be less attractive. So it's something to have in the portfolio but not to be too dependent on it because returns will not be there on 10-year cycle. </p></blockquote><p></p><p>Going forward, I noted infrastructure will produce solid returns, liquid absolute returns (hedge funds) kicked in last year (8% of the total portfolio), real estate will still suffer challenges in some sectors and private equity will do well when there are dislocations in markets and they can put money to work.</p><p>Jo responded:</p><p></p><blockquote><p>When you look over the last 10 to 15 years, the asset class that has performed the best on an absolute and relative basis is private equity. We have to make sure that comes back and we drive value creation.</p><p>The structure that we now have with two CIOs, Steve McLennan who's one of them, has the job to not only look at allocation across the portfolio to make sure we have the blend right but also how we drive that value creation across the different asset groups His job is that we drive liquidity, value creation and the assumptions we are making in our long-term planning are realistic and can be driven out of the respective teams.</p><p><b>Instead of focusing on weaker companies and trying to manage them, it's a truism for me that you're better off looking at the strong companies and help them so they become dominant and grow more than they would do otherwise with the right support.</b> We try to provide some operational support as well as right activity from the size of team as where they are a big asset but could become a really significant asset in our portfolio. It's easier to grow a business from a $2 billion valuation to $4 billion valuation than to try to recover value on a $200 million net in asset wher eit's going to be really hard to get back to where you started,</p></blockquote><p></p><p>I then asked Jo specifically what percentage of their private equity portfolio is funds, co-investments and purely direct:</p><p></p><blockquote><p>Directs has moved up a fair bit. If you look at the private equity portfolio, first bit of segmentation, we do have a funds book, but the balance about 80% is direct. We do co-investments but we do a lot more on our own to avoid the carry drag. The other thing is we made a lot of commitments recently to diversity, climate change, to the right level of social impact. You can deliver that a lot more easily when you own the asset and are a majority owner than when you're a minority partner to someone else. When we have more control, we can deliver more broadly on our commitments across the plan.</p><p>The second thing is if you look at the returns we made, our direct book has done very well relative to co-investing. If we co-invest with a partner where we are a significant minority -- say about 40% -- that's more of a controlled investment, it's more difficult when we are between 5% to 15% bracket in terms of the level of influence we have, an that's probably the area we've tuned down a little bit over the last 2-3 years.</p></blockquote><p></p><p>[<b>Note</b>: I still am not quite sure what percentage of their PE portfolio is purely directs meaning they originated deal and have full control relative to co-investments where they are significant minority owners relative to syndication where they are insignificant minority owners, but the key here is broadly, 80% of the portfolio is direct meaning they pay no fees and that's what drives returns.]</p><p>Jo Taylor was also clear that the focus on ESG has not hampered their performance:</p><p></p><blockquote><p>A couple of things. We invest to provide a fully funded plan for our members but our members also have opinions. One of their opinions, they want us to do the right thing around climate and how those businesses are constituted and run. And we set up to make all of our businesses better over the longer term because we think if you are generally a well run business with diverse employees and diversity of thought, you will make better returns over the long run. Our evidence is what we are doing in that area s helping our businesses to perform better. <b>If it wasn't the case, I'd go back to my other fiduciary duties and make sure we are making the best returns for our members and if that isn't working we should go back to reflect on it</b>.<br /></p><p>I think all the things we've been doing in that area. A good one is climate, some people ask is it a profitable area to invest. It has been for us. We've made good returns in infrastructure and early stage investing around climate. The data is convincing enough to say we can invest in those projects carefully and selectively and make good returns because over time, other investors want to own those assets and the growth they are able to get is significantly better than some other industries.</p></blockquote><p>Teachers' has been a leader in climate investing and investing in the transition economy. Jo told me they really like electricity transmission and have done there in various countries but he also noted there remains uncertainty in alternative fuels and it's till early days for transition investing.</p><p>Lastly, I noted it was a really off year as they underperformed their benchmark by 680 basis points given what happened in real estate and infrastructure (see discussion above) but what are the risks he sees going forward given unprecedented herding in mega cap tech stocks in the stock market?<br /></p><p>Jo responded:</p><p>A couple of points. We started 2023 with a very cautious and bearish outlook on the world. We thought listed equities were fully valued, there's lots of political risk out there, war going on, plenty of potential shocks to the system which led us to a conservatively composed portfolio with only 10% allocated to listed equities. I guess that played out in 2023 where we were more cautious than others were or maybe we needed to be against our benchmark. It's tough to beat an S&P 24% growth benchmark but our view was there was more downside risk which didn't turn out to be the case.</p><p>So if you look at 2024 with assets that went up in 2023, what do you do? We are more likely to stay the course and say we see plenty of risks out there, you want to keep a conservatively composed portfolio. <b>We are a mature plan, we can't sustain large losses</b>. <br /></p><p>But what we will do is take a little bit more risk than a purely defensively composed portfolio, something more in mid-range, where would you allocate that risk going forward. And that is something we are looking at, where would that be best allocated an not necessarily in listed equities but there may be a component of that, but also taking a slightly different risk allocation in some other areas which should blend the rates of return up a little bit as to what we produced in 2023.<br /></p><p> He added:</p><p></p><blockquote><b>If the benchmark continues to move like it did in 2023, we are probably going to be forced to blend up the risk.</b></blockquote><p></p><p>We ended up talking about Asia where they paused on China and where Bruce Crane has made some nice investments. He did admit however there are fewer larger transactions in Asia than other regions and that is why scaling activities there isn't as straightforward as you would think. <br /></p><p>Alright, it's exactly 9 p.m., I've been working on this comment all day and want to once again thank Jo Taylor for another very insightful discussion.</p><p>Please take the time to carefully read OTPP's 2023 annual report <a href="https://www.otpp.com/en-ca/about-us/our-results/annual-reporting/" target="_blank">here</a>, it's very detailed and covers a lot more material.</p><p>I will end with some compensation tables. First, the remuneration for the board of directors:<br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi89P465EjB8VYl3IOs4QQUWhcXHQHQ0-yyaML_E2D1YzDopJ71P8MpkhTT85Qpr23JF5UKaSe2CHaG2KI2JaMaHCxdzY_vDOp9An-C_qERia6CYuZogz_PIBGYMt2_M8XDt5dYTswwGuxXZBSstquVp3_ajUtzD3gzS0wklZNovlZTTacIGn-r_FLMZOZt/s926/OTPP%20--%20Board%20renumeration.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="883" data-original-width="926" height="610" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi89P465EjB8VYl3IOs4QQUWhcXHQHQ0-yyaML_E2D1YzDopJ71P8MpkhTT85Qpr23JF5UKaSe2CHaG2KI2JaMaHCxdzY_vDOp9An-C_qERia6CYuZogz_PIBGYMt2_M8XDt5dYTswwGuxXZBSstquVp3_ajUtzD3gzS0wklZNovlZTTacIGn-r_FLMZOZt/w640-h610/OTPP%20--%20Board%20renumeration.jpg" width="640" /></a></div><p></p><p>Next the compensation for the executive team:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJSOzIq9gtPlJ9jZ3lW2JpIAAKlsohBooa5sOxOyWdZlRnRfeaUevqMRpxJVL0oLdajbUlwhhczP5yo4mKKiSIXnzRjA9yXE2MpKxghe97B24yxekv6xlx8q5Ku8OEpSZ8bTjUjISyUVopoRx3V_0wYnryNkH4hV3k7vU1NBR0P2GoI07Dn1vlYRfzHy6j/s892/OTPP%20--%20exec%20compensation.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="892" data-original-width="835" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJSOzIq9gtPlJ9jZ3lW2JpIAAKlsohBooa5sOxOyWdZlRnRfeaUevqMRpxJVL0oLdajbUlwhhczP5yo4mKKiSIXnzRjA9yXE2MpKxghe97B24yxekv6xlx8q5Ku8OEpSZ8bTjUjISyUVopoRx3V_0wYnryNkH4hV3k7vU1NBR0P2GoI07Dn1vlYRfzHy6j/w600-h640/OTPP%20--%20exec%20compensation.jpg" width="600" /></a></div><p>Note Jo Taylor's compensation did go down as short-term targets were not met but over the long run, the plan is performing very well and remains fully funded.</p><p>Also, former CIO Ziad Hindo's compensation was not disclosed but I am sure he did very well last year as he has done over the last ten years.</p><p>That is all from me, it's been a long day and I am still recuperating and my back is aching.</p><p>Remember, you simply will not find this level of detail and sophistication anywhere else, so please support this blog financially via PayPal options at the top left-hand side and help me continue the important work I do covering Canada's large pension plans and funds.</p><p>Below, <span class="yt-core-attributed-string yt-core-attributed-string--white-space-pre-wrap"><span class="yt-core-attributed-string--link-inherit-color" style="color: #131313;">CNBC anchor Sara Eisen joins Citadel founder and CEO Ken Griffin in a fireside chat, as he shares his views on the latest market trends and the key forces that will drive the industry in 2024, at the International Futures Industry conference in Boca Raton, Florida. Source: FIA (Futures Industry Association).</span></span></p><p>This is a must watch interview, Ken Griffin at his best, touting the virtues of capitalism and a system which rewards innovation and he doesn't hold back on his disdain for useless regulations, climate policies and more.</p><p>Citadel is one of the many hedge funds OTPP, CDPQ and other large Canadian pension funds invest in so take the time to listen to his views, he understands economics and the financial risks ahead.
</p><p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/SIwcCy5zg5E?si=ILZ_B6tdEZj_uvZf" title="YouTube video player" width="640"></iframe> </p><p></p>Leo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.com0tag:blogger.com,1999:blog-5879608286191780679.post-66426111151601759332024-03-11T18:24:00.005-04:002024-03-11T22:32:42.204-04:00CPP Investments Acquires Significant Minority Stake in Italy's NetCo<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3TtOhRHM6EYhzLpDkT2lFFveehbds5ztI-_zt15unps3N2LqPg020YC2xzuUHi4VNhyphenhyphenqikp6eKmgHVfv_jaq72dhyjaxyUlf0jHLA-0M4vE_JYjcyVeS9VWPESKJ9NWfwD92LSEaKUZFYsdt9yxUefbrmN0MYTm2rcMN3ISqWNV71IPdmaBEk67YZfpUz/s1263/Pietro%20Labriola.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="710" data-original-width="1263" height="225" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3TtOhRHM6EYhzLpDkT2lFFveehbds5ztI-_zt15unps3N2LqPg020YC2xzuUHi4VNhyphenhyphenqikp6eKmgHVfv_jaq72dhyjaxyUlf0jHLA-0M4vE_JYjcyVeS9VWPESKJ9NWfwD92LSEaKUZFYsdt9yxUefbrmN0MYTm2rcMN3ISqWNV71IPdmaBEk67YZfpUz/w400-h225/Pietro%20Labriola.jpg" width="400" /></a></div>Freschia Gonzales of Wealth Professional <a href="https://www.wealthprofessional.ca/news/industry-news/cpp-investments-joins-italys-netco-digital-venture/384403" target="_blank">reports</a> CPP Investments secures a 17.5% stake in Italy's largest telecom network, aiming for digital growth: <br /><p></p><div class="wrapper wrapper--detail mb-30-30-20">
<div class="wrapper--detail__body">
<p></p></div></div><blockquote><div class="wrapper wrapper--detail mb-30-30-20"><div class="wrapper--detail__body"><p>Canada Pension Plan Investment Board
(CPP Investments) is set to expand its portfolio in Italy's digital
infrastructure, having agreed to secure a 17.5 percent stake in NetCo
for up to $2.9 bn.</p>
<p><b>This move is part of a larger transaction that places NetCo's
enterprise value at approximately $27.5 bn. NetCo, emerging from Telecom
Italia S.p.A, represents Italy's most extensive telecom network and is
currently being acquired by the Optics BidCo investor group.</b></p>
<p><b>This group is spearheaded by Kohlberg Kravis Roberts & Co. L.P.
(KKR) and includes notable members such as a wholly owned subsidiary of
the Abu Dhabi Investment Authority (ADIA), the Italian infrastructure
fund F2i, and the Ministry of Economy and Finance of the Italian
Government</b>.</p>
</div>
</div><div class="wrapper wrapper--detail mb-30-30-20">
<div class="wrapper--detail__body">
<p>NetCo's operational focus will be on its fixed network assets, which
are in the process of being spun off from Telecom Italia. It aims to
offer nationwide connectivity to both residential and commercial spaces
through an open-access wholesale model, utilizing a blend of copper and
fiber technologies. </p>
<p><b>James Bryce, managing director and global head of infrastructure at
CPP Investments, highlighted the strategic importance of NetCo, stating,
“NetCo will provide critical end-to-end data connectivity services that
support the functioning of the Italian economy.”</b></p>
<p><b>He expressed confidence in the investment's alignment with long-term,
quality digital infrastructure development across Italy, while also
anticipating beneficial, long-term, risk-adjusted returns for the fund.
Bryce also sees potential for further infrastructure investments in
Italy by CPP Investments</b>.</p>
<p>The investment strategy for NetCo includes pushing forward a
comprehensive network upgrade, enhancing service quality and capacity
with fiber-based solutions, phasing out outdated copper technologies,
and improving IT systems and operational efficiencies.</p>
<p>This transaction is slated for closure in the summer of 2024, pending the fulfillment of customary conditions.</p></div></div></blockquote><p>Kavit Majithia of Mobile World Live also <a href="https://www.mobileworldlive.com/north-america/canada-fund-agrees-deal-for-netco-stake/" target="_blank">reports</a> Canada fund agrees deal for NetCo stake:</p><div class="article-body prose prose-slate dark:prose-invert">
<p></p><blockquote><p>A Canadian investment fund committed to invest CAD2.9 billion ($2
billion) for a minority stake in Telecom Italia’s (TIM) fixed network
business NetCo, joining a KKR-led consortium which has agreed a deal to
buy the entire unit from the operator.</p>
<p>The Canada Pension Plan Investment Board (CPP) stated it has entered
into an agreement to join KKR’s Optics Bidco investor group, a move that
will give it a 17.5 per cent interest in the fixed business.</p>
<p>The investor group, which includes involvement from a wholly-owned
subsidiary of the Abu Dhabi Investment Authority, Italian infrastructure
fund F2i and the Italian government, struck a <a href="https://www.mobileworldlive.com/operators/kkr-submits-long-awaited-bid-for-telecom-italia-fixed-assets/">deal to acquire </a>NetCo for €18.8 billion in late 2023.
</p>
<p></p>
<p><b>CPP explained the “newly defined Netco business” will comprise fixed
network assets separated from TIM, offering connectivity to homes and
businesses across Italy on an open-access wholesale basis through a mix
of copper and fibre.</b></p>
<p><b>The investor group has also committed to support upgrades to the
existing network to deliver fibre-based services in urban and rural
areas, while decommissioning legacy copper technologies.</b></p>
<p><b>However, the sale has been controversial, with TIM’s largest shareholder Vivendi <a href="https://www.mobileworldlive.com/operators/tim-board-backs-fixed-sale-as-investor-threatens-legal-action/">slamming the decision</a> and subsequently launching legal proceedings against the operator.</b></p>
<p>Despite this, CPP added it expects the transaction to conclude in mid-2024.</p>
<p>James Bryce, MD, global head of infrastructure at CCP investments,
said it was optimistic NetCo can represent the first of several
infrastructure investments in Italy for the company.</p></blockquote></div><p>Last week, CPP Investments issued a <a href="https://www.cppinvestments.com/newsroom/cpp-investments-to-invest-in-italys-digital-infrastructure-network/" target="_blank">press release</a> stating it will invest in Italy's digital infrastructure network:</p><p><b></b></p><blockquote><p><b>Toronto, CANADA (March 08, 2024) </b>– Canada Pension
Plan Investment Board (CPP Investments), has entered into an agreement
to <b>join the Optics BidCo investor group</b>, which is acquiring NetCo – the
most extensive telecoms network in Italy – from Telecom Italia S.p.A.
<b>CPP Investments has committed to acquire a 17.5% interest in NetCo for
up to €2.0 billion (C$2.9 billion), as part of a transaction which
values the business at an enterprise value of approximately €18.8
billion (C$27.5 billion)</b>. The investor group, led by Kohlberg Kravis
Roberts & Co. L.P. (KKR), includes a wholly owned subsidiary of the
Abu Dhabi Investment Authority (ADIA), the Italian infrastructure fund
F2i and the Ministry of Economy and Finance of the Italian Government.</p>
<p><b>The newly defined NetCo business will be primarily comprised of the
fixed network assets being separated out from Telecom Italia S.p.A.,
offering connectivity to homes and businesses across the country on an
open-access wholesale basis with a mix of copper and fiber-based
technologies.</b></p>
<p><b>“NetCo will provide critical end-to-end data connectivity services
that support the functioning of the Italian economy,” said James Bryce,
Managing Director, Global Head of Infrastructure, CPP Investments. “Our
investment alongside these key partners with a shared long-term vision
will help deliver high-quality digital infrastructure across Italy as
well as generating long-term risk-adjusted returns for the fund. We are
optimistic that NetCo can represent the first of several infrastructure
investments in Italy for CPP Investments.”</b></p>
<p>The investor group at NetCo will support the completion of an
extensive upgrade to the existing network to deliver high quality and
high capacity fiber-based services in urban and rural areas,
decommissioning of legacy copper technologies, making improvements to IT
functionality, and driving efficiencies in the business. The closing of
the transaction is expected in the summer of 2024 subject to customary
conditions.</p>
<p><b>CPP Investments is an active global infrastructure investor with 29
direct investments in 13 countries totalling C$51.8 billion as at
December 31, 2023, with significant investments in digital
infrastructure businesses, including Boldyn Networks (United States, UK
and Italy), Cellnex (Pan-European) and V.Tal (Brazil).</b></p>
<p><b>About CPP Investments </b></p>
<p>Canada Pension Plan Investment Board (CPP Investments™) is a
professional investment management organization that manages the Fund in
the best interest of the more than 22 million contributors and
beneficiaries of the Canada Pension Plan. In order to build diversified
portfolios of assets, investments are made around the world in public
equities, private equities, real estate, infrastructure and fixed
income. Headquartered in Toronto, with offices in Hong Kong, London,
Luxembourg, Mumbai, New York City, San Francisco, São Paulo and Sydney,
CPP Investments is governed and managed independently of the Canada
Pension Plan and at arm’s length from governments. At December 31, 2023,
the Fund totalled C$590.8 billion. For more information, please visit <a aria-label="link tag 4" href="http://www.cppinvestments.com">www.cppinvestments.com</a> or follow us on <a aria-label="link tag 5" href="https://www.linkedin.com/company/cppinvestments/">LinkedIn</a>, <a aria-label="link tag 6" href="https://www.instagram.com/cppinvestments/">Instagram</a> or on X <a aria-label="link tag 7" href="https://twitter.com/cppinvestments">@CPPInvestments</a>.</p></blockquote><p></p><p></p><p>Alright, CPP Investments is taking a significant minority stake in Italy's NetCo, acquiring a 17.5% interest in the company for up to €2.0 billion (C$2.9
billion), as part of a transaction which values the business at an
enterprise value of approximately €18.8 billion (C$27.5 billion). </p><p>In doing this transaction, CPP Investments joins the Optics BidCo investor group, an investor group, led by Kohlberg Kravis Roberts & Co. L.P. (KKR), and
includes a wholly owned subsidiary of the Abu Dhabi Investment Authority
(ADIA), the Italian infrastructure fund F2i and the Ministry of Economy
and Finance of the Italian Government.</p><p>These are huge sums and for those of you wondering why is Canada's pension fund investing almost C$3 billion in an Italian telecom network and not in Canadian equities or infrastructure, read my last comment on why the federal government should <a href="http://pensionpulse.blogspot.com/2024/03/leave-canadas-pension-funds-alone-focus.html" target="_blank">leave our pension funds alone</a> and focus its attention elsewhere. <br /></p><p>Importantly, Italy and other governments around the world are privatizing assets, creating winning conditions to attract foreign investors, <b>and this is the right course of action over the long run</b>.</p><p>Our government is dithering which is why the productivity gap with the United States is widening to record levels. Now more than ever, we need to <a href="https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/etude-speciale/special-report_240311.pdf" target="_blank">attract private investment</a> or we risk seeing a permanent decline in Canadians' standard of living.</p><p>And notice it's powerhouse private equity firm KKR which is behind this latest deal to acquire NetCo.</p><p>KKR has been leading the charge in Italy for years, they know exactly how to navigate this complex space and having them and ADIA as a partner only solidifies CPP Investments' position.</p><p>Keep in mind, NetCo's operational focus will be on its fixed network assets, which
are in the process of being spun off from Telecom Italia. It aims to
offer nationwide connectivity to both residential and commercial spaces
through an open-access wholesale model, utilizing a blend of copper and
fiber technologies. </p><p>The digitization of the Italian economy is kicking into second gear and that's why this transaction represents a great long-term deal.</p><p>One hitch, back in November, Telecom Italia’s (TIM’s) largest shareholder Vivendi <a href="https://www.mobileworldlive.com/operators/tim-board-backs-fixed-sale-as-investor-threatens-legal-action/" target="_blank">slammed the decision</a> by the operator’s board to approve a sale of fixed network assets to KKR, vowing to use any legal means possible to challenge the move.</p><p>I'm not sure how this will play out but it can pose a risk to the deal.</p><p>Lastly, recall that last week I discussed why CPP Investments, AIMCo and Manulife IM will <a href="http://pensionpulse.blogspot.com/2024/03/cpp-investments-aimco-and-manulife-im.html" target="_blank">increase their commitment to Boldyn Networks</a> to support its US growth.</p><p>Clearly digital infrastructure is a major theme at CPP Investments and other large pension funds and institutional investors.</p><p>They all continue to see strong tailwinds for the digital infrastructure
sector with increased mobile and fixed data usage requiring considerable
investment in communications infrastructure to enabling better
connectivity.</p><p>And this sector will continue to grow despite a slowdown in the global economy so it's relatively recession-proof.</p><p>That's why Canada's pension fund invested $C2.9 billion to acquire a significant minority stake (17.5%) in Italy's largest telecom network.</p><p>Below, <span class="yt-core-attributed-string yt-core-attributed-string--white-space-pre-wrap"><span class="yt-core-attributed-string--link-inherit-color" style="color: #131313;">Pietro Labriola, Telecom Italia CEO spoke with </span></span><span class="yt-core-attributed-string yt-core-attributed-string--white-space-pre-wrap"><span class="yt-core-attributed-string--link-inherit-color" style="color: #131313;">Francine Lacqua of Bloomberg The Pulse (nice name) to discuss the KKR deal (fast forward to minute 43; November 2023).</span></span></p><p><span class="yt-core-attributed-string yt-core-attributed-string--white-space-pre-wrap"><span class="yt-core-attributed-string--link-inherit-color" style="color: #131313;">Listen carefully to his comments, they need to pay down debt and make huge investments to remain competitive. It's the same story for most telecom companies around the world.<br /></span></span></p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/3t3QIsUhx-E?si=r_dPB6Ogx3YNWS2j" title="YouTube video player" width="640"></iframe>Leo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.com0tag:blogger.com,1999:blog-5879608286191780679.post-24183726486779351442024-03-08T13:57:00.006-05:002024-03-09T06:49:09.657-05:00Leave Canada's Pension Funds Alone, Focus Attention Elsewhere<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjl6s5xhX3rOkFEdtbjSuSP6rVqnsluGwzJf2V7vCoqGMb2_ItK9envGIJVYRgbyfHsziTC1Zoj09hDeh0IZsaKrIrScbGC7qOZqIQebo5iqkr8c5eazD7b10dAvjTABaaKMcvLTq9EjbtX8oRcRX3NLU2GuQ3DhYOMQlm6jHSLen7VEzY-Z4VnDVQI6IWt/s696/Chrystia%20Freeland.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="417" data-original-width="696" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjl6s5xhX3rOkFEdtbjSuSP6rVqnsluGwzJf2V7vCoqGMb2_ItK9envGIJVYRgbyfHsziTC1Zoj09hDeh0IZsaKrIrScbGC7qOZqIQebo5iqkr8c5eazD7b10dAvjTABaaKMcvLTq9EjbtX8oRcRX3NLU2GuQ3DhYOMQlm6jHSLen7VEzY-Z4VnDVQI6IWt/w400-h240/Chrystia%20Freeland.jpg" width="400" /></a></div>James Bradshaw and Andrew Willis of the Globe and Mail <a href="https://www.theglobeandmail.com/business/article-finance-ministers-pension-funds-investing/" target="_blank">report</a> that finance ministers signal desire for Canada’s pension funds to invest more at home as CEOs lobby for change:<p></p><p class="gmail-c-article-body__text gmail-text-pr-5"></p><blockquote><p class="gmail-c-article-body__text gmail-text-pr-5">Federal
and provincial finance ministers are embracing efforts to spur Canada’s
largest pension funds to invest more in the country, but are stopping
short of endorsing rule changes advocated by a group of influential
business leaders who are pushing for more domestic investment.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>On Wednesday, more than 90 chief executive officers at some of the country’s largest companies <a href="https://www.lba.ca/publication/open-letter-canada/" target="_blank">signed an open letter</a>
that urges federal and provincial finance ministers to “amend the rules
governing pension funds to encourage them to invest in Canada.”</b></p><p class="gmail-c-article-body__text gmail-text-pr-5">The
letter is the latest salvo in a campaign to push political leaders to
use regulations and incentives to steer more of the trillions of dollars
that pension funds invest on behalf of retirees into Canadian
investments, particularly to public stock markets but also private
investments in infrastructure, real estate and other assets.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>But
it has drawn sharp pushback from some pension executives who argue that
any system that directs more investment to Canada would cloud the clear
mandate that pension funds have to earn the best returns for their
members and pay pensions on time.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5">Federal
Finance Minister Chrystia Freeland and Ontario Finance Minister Peter
Bethlenfalvy both said in separate statements that they are eager to see
Canada’s major pension funds invest more in Canada, responding to the
CEOs’ open letter. And on Thursday, Ms. Freeland met with CEOs from
major pension funds in Toronto, as part of previously scheduled
prebudget consultations.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>“Canada’s
pension funds are among the world’s most highly respected investors and
provide a secure and dignified retirement for millions of Canadians,”
said Katherine Cuplinskas, a spokesperson for Ms. Freeland, in an
e-mail. “Our government is committed to working collaboratively with
them to find even more opportunities to bring their investment acumen
home to Canada.”</b></p><p class="gmail-c-article-body__text gmail-text-pr-5">Her statement echoes the priorities Ottawa <a href="https://www.theglobeandmail.com/business/article-canada-pension-plan-invest-assets/" target="_blank">set out in the federal government’s fall economic statement</a>, which promised a collaborative focus on domestic investment, “while helping to deliver secure pensions for Canadians.”</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>Ms.
Cuplinskas also highlighted the Caisse de dépôt et placement du Québec
in her statement, “with its strong track record of both delivering
excellent returns and contributing to Quebec’s economic development,” as
“a good example of how effective this approach can be.”</b></p><p class="gmail-c-article-body__text gmail-text-pr-5">The
Montreal-based Caisse manages $434-billion, of which $117-billion is in
Canada and $88-billion in Quebec. It is the only one of Canada’s
largest pension funds that has a dual mandate: to earn optimal returns
on its investments but also to contribute to Quebec’s economic
development.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>That
comparison could raise alarms among pension executives, however, some of
whom privately suspect that double mission hampers the Caisse’s
performance. The Canada Pension Plan Investment Board – with a singular
mandate to earn a maximum rate of return without undue risk of loss –
has averaged a 9.3-per-cent annual return over 10 years. That compares
with a 7.4-per-cent return for the Caisse.</b></p><div class="gmail-BaseAd__StyledRootBaseAd-sc-1khlkqq-1 gmail-l-media"><div class="gmail-c-ad gmail-c-ad--inline gmail-c-ad--oneX4" id="gmail-c-ad--oneX4-gpt-0"><div class="gmail-c-ad__wrapper"><div class="gmail-c-ad__image" id="gmail-oneX4-gpt-0"></div></div></div></div><p class="gmail-c-article-body__text gmail-text-pr-5">There are also <a href="https://www.theglobeandmail.com/business/article-canada-pension-plan-invest-assets/" target="_blank">fears among some pension fund leaders</a>
that new measures to tilt investment decisions to Canada’s advantage
would chip away at the independence that has helped make Canada’s large
pension funds stable and effective.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>The
CEO of Ontario Municipal Employees Retirement System, Blake Hutcheson,
said the fund manager – which invests $129-billion on behalf of 600,000
Ontario public-service workers – is “dedicated to growing and fiercely
defending their retirement savings,” in an e-mailed statement. “We must
put members’ interests first and foremost, above those of any
self-interested parties with competing agendas.”</b></p><p class="gmail-c-article-body__text gmail-text-pr-5">Mr.
Hutcheson said that roughly one quarter of OMERS assets – about
$34-billion – are invested in Canada, including in infrastructure, clean
energy, hotels, office buildings and shopping centres, often through
direct private investments not available to public-market investors. And
he said OMERS has told federal and provincial governments that it is
willing to work together to find new investment opportunities – as long
as they “meet our required risk and return profile.”</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>“That
co-operative approach is in the best interest of our plan and this
nation,” he said. “Any attempt to mandate investments in certain
prescribed asset classes or components of our economy would limit our
flexibility and make it extremely difficult to continue to deliver on
our pension promise.”</b></p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>Mr.
Bethlenfalvy, Ontario’s Finance Minister, said “we agree that Canadian
pension funds should invest more at home,” in an e-mailed statement.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>“We
also understand that pension funds need to make returns that support
their pensioners and provide stability for the future,” he said. “That
is why our government launched the Ontario Infrastructure Bank that will
partner with pension funds and enable Ontario workers to put their
pension to work right here at home.”</b></p><p class="gmail-c-article-body__text gmail-text-pr-5">Ontario <a href="https://www.theglobeandmail.com/canada/article-ontario-proposes-3-billion-infrastructure-bank-warns-of-bigger-deficit/" target="_blank">announced its provincial infrastructure bank</a>,
with $3-billion in initial funding, modelled after similar institutions
launched by Ottawa and governments in Britain and California, seeking
to use injections of government money to attract more private-sector
investment. <br /></p></blockquote><blockquote><p class="gmail-c-article-body__text gmail-text-pr-5">Alberta’s
pension fund managers “must make investment decisions that align with
the mandate of their clients and comply with investment policies and
goals,” said Savannah Johannsen, a spokesperson for provincial Finance
Minister Nate Horner in an e-mail.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>The
open letter was signed by CEOs and senior executives in industries that
include auto parts, oil and gas, airlines, telecommunications, banking
and grocery retail. It continues a crusade spanning more than two years,
led by Peter Letko and Daniel Brosseau, co-founders of Montreal-based
investment manager Letko, Brosseau & Associates Inc.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5">One
option put forward by Mr. Letko and Mr. Brosseau – but not necessarily
endorsed by the signatories to the open letter – would be to require a
pension fund making an investment outside Canada to set aside some money
in a reserve. These pension plan reserves would be financially prudent,
they said, as they would hedge against risks such as moves in currency
markets, and by exempting domestic investments from the same
requirement, the policy would make Canadian investments more attractive.</p><p class="gmail-c-article-body__text gmail-text-pr-5">“It’s
to introduce some element that they can enter into their calculus that
would differentiate between a domestic and a foreign investment,” Mr.
Brosseau said in an interview. <br /></p></blockquote><p>Let me thank Senator Clement Gignac for posting this article on LinkedIn earlier today and here is the comment I posted when I read it:</p><p></p><blockquote><p>Politicians love pandering to the public and this issue is an easy one to manipulate. Why not invest more in Canada, eh?</p><p>
Well, here’s some food for thought. Canada’s mighty pensions invest more in Canada than Norway’s Government Pension Fund with over $1.6 trillion in assets, almost exclusively invested abroad:
<a href="https://www.nbim.no/en/">https://www.nbim.no/en/</a></p><p>
<b>More importantly, Canada’s pensions have long-dated liabilities and have been pleading with our governments to privatize infrastructure assets to no avail. If governments want Canada’s mighty pensions to invest more domestically, they should create winning conditions to allow them to invest in domestic brownfield and greenfield infrastructure projects.</b></p><p>
<b>Bottom line:</b> We need an open and transparent debate about where Canada’s large pensions invest and why and if we want them to invest more in domestic assets, which assets are where Canadians get most bang for their pension savings?<b> In my opinion, it’s in infrastructure, not resource equities or other stocks.
</b></p></blockquote><p></p><p>Let me be even more blunt, the mandate of Canada's large pension funds is to make sure we have generational wealth built up to pay long-dated liabilities, and to do this properly, they need to seek the best risk-adjusted returns across all asset classes all over the world.</p><p>I read the <a href="https://www.lba.ca/publication/open-letter-canada/" target="_blank">signed open letter</a> to finance ministers and wasn't terribly impressed.</p><p>It seems like a bunch of people have an agenda, an angle, and all of a sudden, everyone is a pension expert.</p><p>I spoke to Peter Letko and Daniel Brosseau of <a href="https://www.lba.ca/" target="_blank">LetkoBrosseau Global Investment Management</a> back in November to set the record straight on where they stand on <a href="http://pensionpulse.blogspot.com/2023/11/letko-and-brosseau-set-record-straight.html" target="_blank">Canadian pension funds investing more in Canada</a>.</p><p>No doubt, they are pension experts, started off at CN Pension before opening their own shop and they told me the impetus behind their effort was to have a more open and transparent conversation of where our large pensions invest.</p><p>But when they start telling me about how Australia's pensions are mandated to invest a certain portion of their assets in domestic equities, I tune off.</p><p>Again, Norway's giant Government Pension Fund has 98% of its assets invested abroad, and it's doing exceptionally well over the long run.</p><p>What is behind this push to invest more in Canada?</p><p>I suspect people have an angle to play and they see our cash-rich pension funds as a solution to structural problems that can be traced back to Ottawa, namely, policies that have hindered foreign investment and protected industries from global competition.</p><p>It infuriates me when I read that Canada's large pension funds should invest more in Canada.</p><p>Why aren't global funds investing more in Canada? </p><p>I know why, it's the same reason why I only invest in US equities and will teach my child how to trade properly and only invest US equities.</p><p>The Canadian stock market is a joke, it truly is, big banks, big telecoms and big energy shares, big deal!</p><p>I know some of you will disagree with me, that's fine, there are exceptional companies in Canada but let's call a spade a spade, Canadian stocks are a fart in the wind compared to US stocks and our main industries are federally backed oligopolies.</p><p>Yeah, I know, I can invest in Bell, Enbridge, Bank of Nova Scotia, you name it and collect a nice dividend but it bores the living hell out of me.</p><p>Pas pour moi.</p><p>And why are we always talking about Canadian equities and our large pensions?</p><p>What have the federal and provincial governments done to create winning conditions to invest more in domestic infrastructure?</p><p>Diddly squat! The Canada Infrastructure Bank and the new Ontario Infrastructure Bank are a joke, no government is privatizing large infrastructure assets so our large pensions can bid on them, and here we are complaining that our resource sector is "starving for cash" and our pensions should invest more in Canada.</p><p>I'm fed up with this debate, a lot of chiefs who don't really know what they're talking about and let me be clear, the more governments get involved in the way our pensions manage their assets, the worse off our retirement system will be over the long run.</p><p>What about CDPQ and its dual mandate? What about it? They have been successful till now but if I were to put CEO Charles Emond and his predecessor Michael Sabia on a polygraph, I can assure you they'd tell me they'd wish they didn't have this dual mandate.</p><p><b>Investing in our own backyard has pros and cons.</b></p><p>Sure, you know the companies better but it opens the door to fraud, abuse and subsidizing losers over the long run.</p><p><b>I believe in capitalism. </b></p><p>When I am trading US biotech stocks (roughly 30 of them I watch closely) to make returns, nobody is there to hold my hand and tell me what to do, <b>it's either I make money or die, period</b>.</p><p>And that's my message for every Canadian industry looking for a handout from our large pension funds: shape up, become competitive or you will die sooner or later.<br /></p><p>Canadians working hard, forced to contribute to the Canada Pension Plan and other pension plans that cover their members, expect their pension fund managers to invest that money wisely over the long run and diversify across geographies and industries.</p><p><b>The biggest mistake we can do is tamper with a successful governance model which has produced great long-term risk-adjusted returns.</b></p><p>My message to Ottawa and provinces, you can have discussions with our pension funds, you can and should demand <b>full transparency</b>, but keep your grubby hands off our pension assets, let experts manage these assets in the best interests of contributors and beneficiaries.</p><p>Do I have concerns about some investments? You bet, I wouldn't invest a dime in China directly, only indirectly through US stocks, because I fundamentally don't believe in investing in a communist or autocratic country. </p><p>Do we need a conversation about where our large pensions invest, how they value private markets and more? Sure, I'm a stickler for transparency and accountability and we need these conversations.</p><p><b>But let me be very clear, the best bang for our pension buck lies in domestic infrastructure and that's where finance ministers need to focus their attention, in creating winning conditions to allow our large pensions to invest more in domestic infrastructure, not stocks and bonds.</b></p><p></p><p>If you want to read another comment on this, read Jack Mintz's latest on why you <a href="https://financialpost.com/opinion/dont-solve-investment-woes-workers-backs" target="_blank">can't solve investment woes on workers’ backs</a>.</p><p>This country has huge problems and the biggest problem is that we have a bunch of incompetent people in Ottawa who don't know how to run it properly.</p><p>Anyway, I get really irritated reading these articles, everyone has an opinion but very few are transparent about the angle they're playing.</p><p>Let's do what's right for the country, let's make sure we strengthen, not weaken, our retirement system and let's introduce policies that make our industries more competitive and stronger, thus attracting more foreign and domestic investment. </p><p>Below, highlights from <span class="yt-core-attributed-string yt-core-attributed-string--white-space-pre-wrap"><span class="yt-core-attributed-string--link-inherit-color" style="color: #131313;">President Joe Biden's 2024 State of the Union address before Congress on Thursday. He sure came out swinging last night, it was nice to see him on fire again.<br /></span></span></p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/rvpLNjP8DOE?si=iFECmQ3PApWTqwO9" title="YouTube video player" width="640"></iframe>Leo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.com0tag:blogger.com,1999:blog-5879608286191780679.post-37946125524412986532024-03-07T16:48:00.002-05:002024-03-07T20:00:34.804-05:00CPP Investments, AIMCo and Manulife IM Support Boldyn's US Growth<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEioDvaOM7ny0Rb2-6scz_URYpU9KF0PAxjoxN2qF-7KoKv4sTO3l-o0hnmqChZDcM1BnjcR8IH1PcJiPgcaHtcgFi5fVrghP8i1_DkpI5cZV6cAHZCS0PS-w3ittsuYoHlFRf8vDu8uzF96ESER5bDEFuS7i4Oare2-bsR4dmA3WTVn84Za3oBXLTbn7s1q/s840/Boldyn.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="473" data-original-width="840" height="225" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEioDvaOM7ny0Rb2-6scz_URYpU9KF0PAxjoxN2qF-7KoKv4sTO3l-o0hnmqChZDcM1BnjcR8IH1PcJiPgcaHtcgFi5fVrghP8i1_DkpI5cZV6cAHZCS0PS-w3ittsuYoHlFRf8vDu8uzF96ESER5bDEFuS7i4Oare2-bsR4dmA3WTVn84Za3oBXLTbn7s1q/w400-h225/Boldyn.jpg" width="400" /></a></div>SWFI <a href="https://www.swfinstitute.org/news/102340/canadian-pensions-help-fund-boldyn-buyout-of-apogee-telecom" target="_blank">reports</a> Canadian pensions help fund Boldyn buyout of Apogee Telecom:<p></p><p></p><blockquote><p>Canada Pension Plan Investment Board (CPP Investments), Alberta
Investment Management Corporation (AIMCo) and Manulife Investment
Management announced a new follow-on commitment to Boldyn Networks
(Boldyn), a shared network infrastructure provider in the U.S. and
globally. <b>This commitment will support Boldyn’s ongoing growth strategy,
including the agreed acquisition of Austin, Texas-based Apogee Telecom,
Inc. (Apogee), one of the largest providers of on-campus connectivity
infrastructure in the U.S. higher education industry</b>. Boldyn Networks
was formerly known as BAI Communications. BAI Communications acquired
Mobilitie in late 2021, Vilicom in late 2021, Signal Point in early
2022, and ZenFi Networks in late 2022. BAI Communications also purchased
New York subway communications specialist Transit Wireless. </p> <p><b>This
acquisition represents an opportunity for Boldyn to grow its U.S.
footprint and capabilities by expanding into the higher education sector
as the demand for highspeed, low latency connectivity at colleges and
universities continues to rapidly increase.</b> <b>Serving more than 350
institutions, Apogee offers wireless residential campus networks for
students, faculty and staff, as well as managed campus network and
technology solutions, fiber infrastructure as a service, and video
services. Through this deal, Apogee’s customers will have access to
Boldyn’s extended wireless capabilities.</b></p> <p><b>Since 2009, CPP
Investments has been a majority shareholder in Boldyn (with an 86%
position) and has committed approximately C$3.5 billion to the Boldyn
platform, with AIMCo as a minority shareholder in the company (with a
10% position). In the fourth quarter of 2021, Manulife Investment
Management, on behalf of its clients, partnered with Boldyn to acquire a
minority interest in its digital infrastructure assets in the U.S.</b></p> <p>The Apogee transaction is subject to customary regulatory consents. It is expected to close in the second quarter of 2024.</p> <p><b>Advisors</b><br />
Boldyn Networks was advised by Bank Street Group and Latham & Watkins. Houlihan Lokey acted as financial advisor to Apogee.</p> <p>BAI
Communications was formerly Broadcast Australia, is an Australian
telecommunications systems company. In November 2019, Broadcast
Australia was rebranded BAI Communications. Macquarie Bank completed its
acquisition of National Transmission Agency in 2002 the seed asset in
the publicly listed Macquarie Communications Infrastructure Group (MCIG)
fund and rebranded it as Broadcast Australia. The MCIG fund, including
Broadcast Australia, was acquired by the Canada Pension Plan Investment
Board in 2009. <br /></p></blockquote><p>CPP Investments issued a <a href="https://www.cppinvestments.com/newsroom/cpp-investments-aimco-and-manulife-im-increase-commitment-to-boldyn-networks-to-support-continued-growth-in-the-u-s/" target="_blank">press release</a> yesterday stating that along with AIMCo and Manulife IM, it will increase its commitment to Boldyn Networks to support its US growth:</p><p><b></b></p><blockquote><p><b>Toronto/Edmonton, CANADA (March 6, 2024)</b> – Canada Pension Plan Investment Board (<a aria-label="link tag 4" href="https://www.cppinvestments.com/">CPP Investments</a>), Alberta Investment Management Corporation (<a aria-label="link tag 5" href="http://www.aimco.ca/" rel="noopener" target="_blank">AIMCo</a>) and <a aria-label="link tag 6" href="https://www.manulifeim.com/us/en" rel="noopener" target="_blank">Manulife Investment Management</a> today announced a new follow-on commitment to <a aria-label="link tag 7" href="http://www.boldyn.com/" rel="noopener" target="_blank">Boldyn Networks</a>
(Boldyn), a leading shared network infrastructure provider in the U.S.
and globally. This commitment will support Boldyn’s ongoing growth
strategy, including the agreed <a aria-label="link tag 8" href="https://www.boldyn.com/news/boldyn-networks-expands-its-connectivity-offering-into-us-higher-education-with-agreement-to-acquire-apogee-telecom" rel="noopener" target="_blank">acquisition</a> of <a aria-label="link tag 9" href="https://www.apogee.us/" rel="noopener" target="_blank">Apogee Telecom</a> (Apogee), one of the largest providers of on-campus connectivity infrastructure in the U.S. higher education industry.</p>
<p><b>This acquisition represents an opportunity for Boldyn to grow its
U.S. footprint and capabilities by expanding into the higher education
sector as the demand for highspeed, low latency connectivity at colleges
and universities continues to rapidly increase. Serving more than 350
institutions, Apogee offers wireless residential campus networks for
students, faculty and staff, as well as managed campus network and
technology solutions, fiber infrastructure as a service, and video
services. Through this deal, Apogee’s customers will have access to
Boldyn’s extended wireless capabilities.</b></p>
<p><b>“As demand for connectivity and data-rich content rises, Boldyn is
well placed to provide advanced, high-performing network services as a
global player in the wireless infrastructure sector,” said James Bryce,
Managing Director, Head of Infrastructure, CPP Investments. “Investing
in digital infrastructure continues to be attractive as the world
becomes increasingly data centric, and we believe Boldyn’s acquisition
of Apogee will position the company for growth within the large-scale
U.S. higher education industry.”</b></p>
<p>Since 2009, CPP Investments has been a majority shareholder in Boldyn
(with an 86% position) and has committed approximately C$3.5 billion to
the Boldyn platform, with AIMCo as a minority shareholder in the
company (with a 10% position). In the fourth quarter of 2021, Manulife
Investment Management, on behalf of its clients, partnered with Boldyn
to acquire a minority interest in its digital infrastructure assets in
the U.S.</p>
<p><b>“Boldyn has articulated and effectively executed an impressive growth
strategy with acquisitions that both expand its footprint and
complement its core capabilities as a leading network infrastructure
provider,” said Ben Hawkins, Executive Managing Director, Head of
Infrastructure & Renewable Resources, AIMCo. “Apogee brings
important scale to Boldyn’s U.S. business as well as a new focus on the
growing higher education market.</b></p>
<p>“We are pleased to continue to support the growth of Boldyn Networks
as one of the leading neutral-host connectivity providers in the U.S.
positioned to benefit from the increased demand for fixed and wireless
connectivity solutions,” said <b>Daniel Neil, Senior Director,
Infrastructure Investments, Manulife Investment Management. “We believe
that Boldyn’s acquisition of Apogee is a strategic fit as it will expand
the company’s wireless capabilities and provide an opportunity to serve
new clients as colleges increasingly outsource connectivity
infrastructure to trusted partners.”</b></p>
<p>The Apogee transaction is subject to customary regulatory consents. It is expected to close in the second quarter of 2024.</p>
<p><b>About CPP Investments</b></p>
<p>Canada Pension Plan Investment Board (CPP Investments™) is a
professional investment management organization that manages the Fund in
the best interest of the more than 22 million contributors and
beneficiaries of the Canada Pension Plan. In order to build diversified
portfolios of assets, investments are made around the world in public
equities, private equities, real estate, infrastructure and fixed
income. Headquartered in Toronto, with offices in Hong Kong, London,
Luxembourg, Mumbai, New York City, San Francisco, São Paulo and Sydney,
CPP Investments is governed and managed independently of the Canada
Pension Plan and at arm’s length from governments. At December 31, 2023,
the Fund totalled C$590.8 billion. For more information, please visit <a aria-label="link tag 10" href="http://www.cppinvestments.com/">www.cppinvestments.com</a> or follow us on <a aria-label="link tag 11" href="https://www.linkedin.com/company/cppinvestments/">LinkedIn</a>, <a aria-label="link tag 12" href="https://www.instagram.com/cppinvestments/">Instagram</a> or on X <a aria-label="link tag 13" href="https://twitter.com/cppinvestments">@CPPInvestments</a>.</p>
<p><b>About Alberta Investment Management Corporation (AIMCo)</b></p>
<p>AIMCo is one of Canada’s largest and most diversified institutional
investment managers with more than C$158 billion of assets under
management. AIMCo invests globally on behalf of pension, endowment,
insurance, and government funds in the Province of Alberta. AIMCo
manages approximately 30 pools of capital on behalf of our clients. With
offices in Edmonton, Calgary, Toronto, London, Luxembourg, New York,
and Singapore, our more than 200 investment professionals bring deep
expertise in a range of sectors, geographies, and industries. For more
information on AIMCo please visit <a aria-label="link tag 14" href="http://www.aimco.ca">www.aimco.ca</a> or follow us on <a aria-label="link tag 15" href="https://ca.linkedin.com/company/alberta-investment-management-corporation-aimco-">LinkedIn</a>.</p>
<p><b>About Manulife Investment Management<br />
</b><b><br />
</b>Manulife Investment Management is the brand for the global
wealth and asset management segment of Manulife Financial Corporation.
Our mission is to make decisions easier and lives better by empowering
investors for a better tomorrow. Serving more than 17 million
individuals, institutions, and retirement plan members, we believe our
global reach, complementary businesses, and the strength of our parent
company position us to help investors capitalize on today’s emerging
global trends. We provide our clients access to public and private
investment solutions across equities, fixed income, multi-asset,
alternative, and sustainability-linked strategies, such as natural
capital, to help them make more informed financial decisions and achieve
their investment objectives. Not all offerings are available in all
jurisdictions. For additional information, please visit <a aria-label="link tag 16" href="https://www.manulifeim.com/us/en">manulifeim.com</a>.</p></blockquote><p>I discussed Boldyn, formerly known as BAI Communications, before my summer break in 2022 <a href="https://pensionpulse.blogspot.com/2022/08/summer-break-and-latest-news-from-aimco.html" target="_blank">here</a>, stating this:</p><p></p><blockquote><p>[...] CPP Investments, AIMCo and Manulife announced they will increase
their commitment to BAI Communications to support acquisition-led growth
plans. You can read the <a href="https://www.aimco.ca/insights/follow-on-commitment-to-bai" target="_blank">full press release</a> for details and I note the following:</p><p></p><blockquote><p>
<b>“CPP Investments sees significant opportunities as global digital
infrastructure develops in scope and complexity, driven by consumer
demand for connectivity and rapidly-growing data rich content,” said
Scott Lawrence, Managing Director and Head of Infrastructure, CPP
Investments. “As a leading provider in the space, BAI is very well
placed to capture these market opportunities, and we believe our
increased financial commitment to BAI will continue to generate
long-term and sustainable returns on behalf of the CPP’s contributors
and beneficiaries.”</b></p><p>
<b>Since 2009, CPP Investments has been a majority shareholder in BAI (with
an 86% position) and has committed approximately C$3 billion to the BAI
platform, with AIMCo as a minority investor</b>. In the fourth quarter of
2021, Manulife Investment Management, on behalf of its clients,
partnered with BAI to acquire a minority interest in its digital
infrastructure assets in the United States.</p><p>
<b>“AIMCo is proud to support BAI in its agreed acquisition of ZenFi
Networks, a recognized innovator in the provision of digital
infrastructure solutions, on behalf of our clients,” said Ben Hawkins,
Head, Infrastructure, Renewables & Sustainable Investing, at AIMCo.
“The demand for these solutions in the United States shows no signs of
slowing. This latest transaction is the realization of BAI’s management
team positioning the company for sustainable growth. We are pleased to
have this opportunity to partner with CPP Investments and Manulife
Investment Management to drive long-term value.”</b></p><p>
<b>“We continue to see strong tailwinds for the digital infrastructure
sector with increased mobile and fixed data usage requiring considerable
investment in communications infrastructure to enabling better
connectivity,” said Daniel Neil, Director, Infrastructure Investments,
Manulife Investment Management.</b> “Manulife Investment Management is
pleased to support the growth of BAI’s platform. We believe that the
agreed acquisition of ZenFi strengthens BAI’s position as an innovator
of digital infrastructure in the United States.”
The ZenFi transaction is subject to customary regulatory clearances and
is expected to close in the fourth quarter of the calendar year.
</p></blockquote><p></p><p>Digital infrastructure is critically
important and a function of increased mobile and fixed data usage and
CPP Investments has led the way on the BAI platform:<br /></p><p></p><blockquote>Since 2009, CPP Investments has been a majority shareholder in BAI (with
an 86% position) and has committed approximately C$3 billion to the BAI
platform, with AIMCo as a minority investor. In the fourth quarter of
2021, Manulife Investment Management, on behalf of its clients,
partnered with BAI to acquire a minority interest in its digital
infrastructure assets in the United States.</blockquote></blockquote><blockquote></blockquote><p>It doesn't surprise me that all three organizations are now fully supporting Boldyn's acquisition of Texas-based <a href="https://www.apogee.us/about-apogee/the-apogee-edge/" target="_blank">Apogee Telecom</a>, one of the largest providers of on-campus connectivity
infrastructure in the US higher education industry.</p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgRjxlf-T02bXWT2G3XS9Y_TLWLD4QPwvWd_nr55Dgr9rJohyhxOL6Z4wyAP0_4ynJefB_iTZkL7DNo5i3twIXCLeWiCMJ0rnahJFFl6FTu8nrNtZYmUYpTrU6rsBvOJFRyMmWAMMqTxsFfQiiQaj4wRN6qZ0r3WM4x6PxQcN8rNrHHci_JtOmYjB6G8ddr/s1161/Apogee.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="560" data-original-width="1161" height="308" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgRjxlf-T02bXWT2G3XS9Y_TLWLD4QPwvWd_nr55Dgr9rJohyhxOL6Z4wyAP0_4ynJefB_iTZkL7DNo5i3twIXCLeWiCMJ0rnahJFFl6FTu8nrNtZYmUYpTrU6rsBvOJFRyMmWAMMqTxsFfQiiQaj4wRN6qZ0r3WM4x6PxQcN8rNrHHci_JtOmYjB6G8ddr/w640-h308/Apogee.jpg" width="640" /></a></div><p></p><p>With the rise of artificial intelligence, digital infrastructure and data centers remain a very hot area in infrastructure and this particular sector is relatively recession-proof.</p><p>Boldyn has been expanding nicely, <a href="https://www.capacitymedia.com/article/2cfnqcfxf441toin05tds/news/boldyn-networks-agrees-to-acquire-cellnexs-private-network-business" target="_blank">announcing</a> back in November that it acquired Spanish towerco Cellnex’s private network business for an as of yet undisclosed fee:</p>
<div class="ArticlePage-articleContainer">
<div class="ArticlePage-articleBody">
<div class="RichTextArticleBody">
<div class="RichTextArticleBody-body RichTextBody"><p></p><blockquote><p>The
acquisition primarily covers Edzcom, a Finland based company that that
designs, builds, and operates private 4G and 5G networks.</p><p><b>Edzcom’s
mobile private network solutions offer wireless connectivity for
enterprise automation, robotics, and real-time remote control and
monitoring.</b></p><p><b>The acquisition means that Boldyn expands its neutral
host European presence to new markets in in Finland, Spain, Germany,
Sweden and France.</b></p><p>Boldyn said it will now be better equipped to provide existing customers with private <b>networks solutions in Europe and the US.</b></p><p><b>“Boldyn
Networks is leading the way in bringing private networks to our
customers so that they can meet all their operational and connectivity
challenges”, said Igor Leprince, Group CEO of Boldyn Networks.</b></p><p>“Edzcom’s
team capabilities, impeccable reputation and recognised expertise are
an important addition to our team to capture the potential of this
market across continents. From venues and wind farms to ports and
manufacturing sites, we are building upon being the partner of choice
for 5G private and converged network infrastructure projects,” Leprince
continued.</p><p>Edzcom’s current projects are predominantly focused on
industrial clients in manufacturing, ports, oil and gas, energy
generation, and mining. It has experience of over 50 implementations
across the Nordics and other European markets.</p><p>“Cellnex has
enabled us to expand from the Nordics to the largest countries in
Europe. We are excited about the opportunity to continue our rapid
growth now under Boldyn Networks,” Mikko Uusitalo, CEO of Edzcom said.</p><p><b>“Boldyn
is a great company who is now acquiring a strong, senior team with
experiences from over 50 deployments across the UK and Europe. We share
the same vision and I am convinced that now as one team we’ll
consolidate our market leadership in bespoke private mobile networks,
expand geographically and stay committed to customer excellency,”
Uusitalo said.</b></p><p>Boldyn said that Edzcom’s solutions helps unlock
productivity and growth and offers continuity and security for
business-critical operations.</p><p>Research from GSMA conducted in June
2023 has suggested industrial private 5G network revenue opportunities
could reach $109.4B globally by 2030.</p><p>The transaction is subject to regulatory and other consents and is expected to close in Q1 2024.</p><p>DLA
Piper acted as legal advisor to Boldyn Networks. Bird & Bird acted
as legal and PWC as financial and tax advisor to Cellnex Telecom and
Edzcom.</p></blockquote><p></p><p>That's why CPP Investments and its partners continue to nurture the growth of this company.</p><p>Below, officially launching at the end of June 2023, Boldyn Networks delivers the advanced shared network infrastructure needed for a smart, inclusive, and sustainable future. From interconnected transit to venues, and enterprises to smart cities, they enable new possibilities in the way people live, work and play.</p><p>
</p><p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/U0HRYilKWiQ?si=vNSDDrhIvHm4OiTG" title="YouTube video player" width="640"></iframe></p><p></p><p></p><p></p></div></div></div></div>Leo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.com0tag:blogger.com,1999:blog-5879608286191780679.post-39398136111891624102024-03-06T14:31:00.008-05:002024-03-07T11:29:06.776-05:00OMERS Posts 4.6% Return in 2023<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEggXSMx_1utPjfNnXUEMi_S-HuphAxX-OdlMPOFj8zD2V9dvOU9pq8i_pTgowhlSkYIQ9AfhyphenhyphenYExEsV-aec-yVs5rWKhkySou1id56Jynk8cF3tzxK45wT0x6D3ODIlKTFfdTQoOiay552VW63Wbcr9PXW16vUdO7cwe-srsGaEoVW-i5CCYAA-aWX6AONI/s1744/OMERS%202023%20highlights.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="681" data-original-width="1744" height="250" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEggXSMx_1utPjfNnXUEMi_S-HuphAxX-OdlMPOFj8zD2V9dvOU9pq8i_pTgowhlSkYIQ9AfhyphenhyphenYExEsV-aec-yVs5rWKhkySou1id56Jynk8cF3tzxK45wT0x6D3ODIlKTFfdTQoOiay552VW63Wbcr9PXW16vUdO7cwe-srsGaEoVW-i5CCYAA-aWX6AONI/w640-h250/OMERS%202023%20highlights.jpg" width="640" /></a></div>Palash Gosh <a href=" https://www.pionline.com/pension-funds/omers-pension-fund-returns-46-2023" target="_blank">reports</a> OMERS pension fund returns 4.6% in 2023:<p></p><p></p><blockquote><p></p><blockquote><p>
Ontario Municipal Employees Retirement System, Toronto, returned a net
4.6% in 2023, an annualized 8% for the three-year period and an
annualized 7.3% for the 10-year period.</p>
The pension fund did not provide benchmark returns.<p>
In 2022, OMERS returned a net 4.2%.</p><p>
Net assets totaled C$128.6 billion ($97 billion) as of Dec. 31, up from
$124.2 billion at the end of 2022, said a Feb. 23 news release.</p><p>
By asset class, the top performers were public equities, which returned a
net 10.4%; credit, 8.3%; bonds, 5.8%; infrastructure, 5.5%; and private
equity, 3.9%.</p><p>
<b>Real estate, which returned a net -7.2%, ranked as the worst-performing asset class.</b></p><p><b>
"Returns in 2023 reflected a major divergence between the performance of
public and private assets," said Jonathan Simmons, OMERS' chief
financial and strategy officer, in the news release.</b></p><p><b>
"Public equities and fixed income had a strong year, and fixed income
assets benefited from higher interest rates. Returns from private asset
strategies were held back by the increased cost of debt, increased
operating costs, and anticipated slower economic growth, all of which
are affecting private market investors worldwide," Simmons added.</b></p><p>
As of Dec. 31, OMERS actual asset allocation was 21% each credit and
infrastructure, 20% public equities, 19% private equity, 15% real
estate, 8% bonds, and -4% cash and funding.</p><p>
<b>Looking ahead to 2024, Blake Hutcheson, OMERS president and CEO, said
in the release: "Higher interest rates are creating opportunities for
us to deploy capital into fixed income to improve future returns,
consistent with our new, more diversified strategic asset mix."</b>
</p></blockquote><p></p></blockquote><p></p><p>James Bradshaw of the Globe and Mail also <a href="https://www.theglobeandmail.com/business/article-omers-results-hurt-by-falling-real-estate-values-the-worst-is-behind/" target="_blank">reports</a> that OMERS chief executive sees better days ahead for real estate portfolio:</p><p class="gmail-c-article-body__text gmail-text-pr-5"></p><blockquote><p class="gmail-c-article-body__text gmail-text-pr-5">Falling
property values across the commercial real estate sector put a dent in
the Ontario Municipal Employees Retirement System’s investment returns
last year, but chief executive officer Blake Hutcheson predicts that
“the worst is behind us.”</p><p class="gmail-c-article-body__text gmail-text-pr-5">OMERS
investments gained 4.6 per cent in 2023, or $5.6-billion after
expenses. The pension fund manager’s results were buoyed by strong gains
from stocks and bonds, but its <a href="https://www.theglobeandmail.com/topics/real-estate/" target="_blank">real estate</a> portfolio lost 7.2 per cent as higher borrowing costs and operating expenses drove down commercial property values.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>OMERS
missed its internal target to earn 7 per cent for the year. But its
longer-term returns have cleared that mark, with the fund averaging an
8-per-cent annual gain over the past three years, after expenses, and
7.3 per cent over 10 years.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5">It
has been a harrowing year for commercial real estate investors, and
OMERS’s business in the sector “got hit hard,” Mr. Hutcheson said. High
interest rates drove up borrowing costs, inflation increased operating
costs and vacancy rates climbed higher. That has forced investors to
sharply mark down property values after many <a href="https://www.theglobeandmail.com/business/article-investing-commercial-real-estate-valuations/" target="_blank">had stubbornly stuck by higher valuations</a> even as central banks ratcheted up interest rates.</p><p class="gmail-c-article-body__text gmail-text-pr-5">Much
of the angst has focused on office buildings and retail outlets such as
shopping malls, as hybrid working arrangements took hold and consumer
purchases tilted more toward e-commerce after the COVID-19 pandemic.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>But
Mr. Hutcheson said OMERS felt the impact on property values across its
real estate portfolio in 2023, including for industrial properties that
have generally been more resilient. That was in spite of a 9-per-cent
increase in income from properties owned by its real estate subsidiary,
Oxford Properties.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>“This year it was pretty universal,” Mr. Hutcheson said.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5">With <a href="https://www.theglobeandmail.com/topics/interest-rates/" target="_blank">interest rates</a>
likely at their peak, however, he predicted that capitalization rates –
the ratio that measures the annual yield from an investment property,
and gives an indication of how risky it is – have hit a high, meaning
that property values could soon start to stabilize, easing the risks to
investors.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>“As the cost of
money comes down, by definition appraisers bring cap rates down,” Mr.
Hutcheson said. “We think, on a go-forward basis, real estate as an
asset class will start to pick up. … The worst is behind us from a
valuation perspective.”</b></p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>That
doesn’t mean the pain is over for real estate, as some property owners
will struggle to refinance expensive debt and to off-load lower-quality
buildings, except at bargain prices.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>That
could create buying opportunities, not only in real estate but other
sectors as well, and OMERS has stockpiled capital to take advantage as
assets come up for sale at attractive prices.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>“We didn’t see any of it in 2023, of note,” Mr. Hutcheson said. “We do expect more of that in the next year and two years.”</b></p><p class="gmail-c-article-body__text gmail-text-pr-5">Last
year, OMERS had a wide divergence in performance between publicly
traded stocks and bonds and privately held investments. Stocks gained
10.4 per cent and bonds were up 5.8 per cent. By contrast, OMERS had
gains of 5.5 per cent from infrastructure and 3.9 per cent from private
equity, which are lower-than-normal returns that compounded its real
estate losses.</p><p class="gmail-c-article-body__text gmail-text-pr-5">That was a
reversal from 2022, when gains from private investments boomed and
public equities and bonds lost money, adding up to an overall return of
4.2 per cent.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>OMERS also
shifted about $4-billion into bonds and private credit last year,
seeking to take advantage of stronger returns from fixed income while
rates are at their highest level in two decades. Most of that sum was
moved out of investments in equities.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>“When
the markets soften, we think our focus on credits and privates will
outperform, and that’s what we’ve experienced over the past three
years,” Mr. Hutcheson said.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5">OMERS
invests on behalf of approximately 600,000 Ontario public-service
workers, including nurses, firefighters and police officers. It now
manages $128.6-billion of assets, up from $124.2-billion a year earlier.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>The plan is 97-per-cent funded and inching closer to being fully funded, up from 95 per cent at the end of 2022.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>“All things considered, we’re feeling good about the way we’re positioned,” Mr. Hutcheson said.</b></p></blockquote><p class="gmail-c-article-body__text gmail-text-pr-5"></p><p>On February 23, the day of my spinal fusion surgery, OMERS issued a <a href="https://www.omers.com/news/omers-generates-5-point-6-billion-dollars-in-investment-income-in-2023#" target="_blank">press release</a> stating it generated $5.6 billion in investment income in 2023:</p><div class="one-column-renderer"><div class="content-wrapper wrapper-2"><div class="container-fluid"><div class="row"><div class="col-sm" style="text-align: left;"><p></p></div></div></div></div></div><blockquote><div class="one-column-renderer"><div class="content-wrapper wrapper-2"><div class="container-fluid"><div class="row"><div class="col-sm" style="text-align: left;"><p>OMERS,
the defined benefit pension plan for broader municipal sector employees
in the province of Ontario, <b>generated a 2023 investment return of 4.6%,
or $5.6 billion, net of expenses</b>. Over the past 10 years, OMERS has
averaged an annual investment return of 7.3%, net of expenses, adding
$66.4 billion to the Plan. Net assets at December 31, 2023, were $128.6
billion, up from $124.2 billion in 2022, and the Plan reported a
smoothed funded status of 97%, up from 95% last year.
<br />
<br />“We are
investors for the long term for the benefit of our members and their
families. Our focus at OMERS remains on our ability to see through
economic cycles. I am extremely pleased that in the past three years,
coming out of the pandemic, our extraordinary global team has earned an
average annual net return of 8.0%, a track record that stands up by any
objective measure. <b>Our 10-year result speaks to our ability to invest
through turbulent times while continuing to deliver for our members,”
said Blake Hutcheson, OMERS President and Chief Executive Officer.
"These returns enable us to keep the pension promise, paying pensions on
time and as planned, as we have done consistently since our creation as
a Plan in 1962.”</b><br />
<br /><b>“As we look ahead to 2024, higher interest
rates are creating opportunities for us to deploy capital into fixed
income to improve future returns, consistent with our new, more
diversified strategic asset mix. We are confident in our ability to
generate long-term returns that will build up the Plan’s assets given
the high quality of our investment portfolio and the strategies that
underpin it. I am very pleased with the way we are positioned for the
future.” </b><br />
<br /><b>“Returns in 2023 reflected a major divergence between
the performance of public and private assets,” said Jonathan Simmons,
OMERS Chief Financial and Strategy Officer. “Public equities and fixed
income had a strong year and fixed income assets benefitted from higher
interest rates. Returns from private asset strategies were held back by
the increased cost of debt, increased operating costs, and anticipated
slower economic growth, all of which are affecting private market
investors worldwide.” </b><br />
<br />“Through a combination of pension
payments, investment activities and our operations, OMERS impacts more
than 1 in every 11 Ontario households,” said Mr. Hutcheson. <b>“Our plan is
contributing $13.7 billion annually to Ontario’s GDP and supporting
more than 143,000 jobs provincewide. We have significant investments in
Ontario with assets that include Bruce Power and Yorkdale Shopping
Centre. We are proud to make a meaningful contribution to the economic
and social strength of this great province.” <br /></b>
<br />“With a promise to
deliver for our members over the long term, our global teams are
relentlessly focused on building a sustainable, affordable and
meaningful plan that will continue to provide security in retirement for
generations of members to come.”
<br /><br />OMERS remains highly rated by four credit rating agencies, including two ‘AAA’ ratings.
<br /></p><p>
<br /><span class="bold"><b>About OMERS</b></span>
<br />OMERS
is a jointly sponsored, defined benefit pension plan, with 1,000
participating employers ranging from large cities to local agencies, and
over 600,000 active, deferred and retired members. Our members include
union and non-union employees of municipalities, school boards, local
boards, transit systems, electrical utilities, emergency services and
children’s aid societies across Ontario. OMERS teams work in Toronto,
London, New York, Amsterdam, Luxembourg, Singapore, Sydney and other
major cities across North America and Europe – serving members and
employers, and originating and managing a diversified portfolio of
high-quality investments in bonds, public and private credit, public and
private equity, infrastructure and real estate.</p></div></div></div></div></div><div class="Table_table-container__Pplou Table_dark-blue-th__KfN8H transparent-tr Table_odd__jDAdf"><div class="Table_desktop-table-container__S27F4" id="Desktop-NetInvestmentReturnsfortheyearsendedDecember31,"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgbxEAJo-fpHqMUGAfbFA97uZBAdL6TeRhO0fT1lYDDjzcUHCxLvsVCMwZlGYcNSkegk7KVt9yE5WAHto6FicarJJU8RB6SvWLoyFAvr9Bic4gFFXhzqJshYBvBeJilJ9xTmnubzTReRoZGf9Yy4FWyDSBL8Fn2vY_JHs4Ktkxmw3CS8gwGC9LIgVjRGfit/s1063/Net%20inv%20returns%20OMERS%202023.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="559" data-original-width="1063" height="336" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgbxEAJo-fpHqMUGAfbFA97uZBAdL6TeRhO0fT1lYDDjzcUHCxLvsVCMwZlGYcNSkegk7KVt9yE5WAHto6FicarJJU8RB6SvWLoyFAvr9Bic4gFFXhzqJshYBvBeJilJ9xTmnubzTReRoZGf9Yy4FWyDSBL8Fn2vY_JHs4Ktkxmw3CS8gwGC9LIgVjRGfit/w640-h336/Net%20inv%20returns%20OMERS%202023.jpg" width="640" /></a></div><div class="two-column-renderer"><div class="content-wrapper wrapper-2"><div class="container-fluid"><div class="row"><div class="col-md-9 none" style="text-align: left;"><h3><span id="2023AssetMix">2023 Asset Mix</span></h3><img alt="2023 asset mix bonds 8%, credit 21%, public equities 20%, private equities 19%, infrastructure 21%, real estate 15%, cash and funding (4)%" height="318" src="https://images.ctfassets.net/iifcbkds7nke/3PkN5lVS8avcRK0T79CaDE/43cd74167cbed7e72a590d6f66fcc7d8/2023-Asset-mix-test-6.png" title="2023 Asset Mix" width="640" /><p></p></div><div class="col-md none" style="text-align: left;"></div></div></div></div></div><p></p><p></p><p><br /></p><p></p><p></p><hr /><h2><span id="2023Highlights">2023 Highlights</span></h2><h6><span id="Bythenumbers">
<span style="font-size: medium;">By the numbers</span></span></h6><ul><li><p>
2023 investment return of 4.6%, or $5.6 billion, net of expenses</p></li><li><p>$128.6 billion in net assets</p></li><li><p><b>A 3-year net return of 8.0%, and a 10-year net return of 7.3%</b></p></li><li><p>612,533 OMERS members including 44,462 new non-full-time employees</p></li><li><p><b>97% smoothed funded ratio – up from 95% in 2022</b></p></li><li><p>3.75% real discount rate</p></li><li><p><b>$34 billion invested in Canadian assets</b></p></li><li><p><b>$13.7 billion contributed by OMERS to Ontario’s GDP</b></p></li><li><p>143,200 jobs supported by OMERS in Ontario</p></li><li><p>96% all-time-high OMERS member service satisfaction</p></li><li><p><b>94% of employees are proud to work for OMERS and Oxford (+6 points above best-in-class)</b></p></li></ul><h6><span id="">
</span></h6><h6><span id="Transactionsin2023" style="font-size: medium;">Transactions in 2023</span></h6><p>
In
2023, OMERS deployed $11.5 billion in capital, making investments that
will contribute to our long-term ability to pay pensions for our
members. <br />
<br />In addition to the transactions we reported in August with our <a class="link blue underline" data-testid="internal-link" href="https://www.omers.com/mid-year-investment-update"><span class="link-text">2023 Mid-year Update</span></a>, we made the following announcements in the latter part of the year. </p><ul><li><p><span class="bold">Maple Leaf Sports & Entertainment</span></p><ul><li><p>OMERS
invested US$400 million for an indirect stake in MLSE. MLSE is the
parent company of sports teams including the National Hockey League’s
Toronto Maple Leafs, the National Basketball Association’s Toronto
Raptors, Major League Soccer’s Toronto FC, and the Canadian Football
League’s Toronto Argonauts.</p></li></ul></li><li><p><span class="bold">Redwood Materials</span></p><ul><li><p>OMERS
participated in Redwood Materials' over US$1 billion investment round.
This funding will help build Redwood’s capacity, expanding the domestic
battery supply chain and allowing customers to purchase battery
materials made in the US for the first time <br /></p></li></ul></li></ul></div></div></blockquote><div class="Table_table-container__Pplou Table_dark-blue-th__KfN8H transparent-tr Table_odd__jDAdf"><div class="Table_desktop-table-container__S27F4" id="Desktop-NetInvestmentReturnsfortheyearsendedDecember31,"><p>Alright, I'm back from the hospital, recuperating at home and have to get to work to catch up on items.</p><p>First order of business is to cover OMERS' results properly.</p><p>Nothing surprised me, the results are in line with what we saw at CDPQ which <a href="http://pensionpulse.blogspot.com/2024/02/cdpq-posts-72-return-in-2023.html" target="_blank">posted a 7.2% return in 2023</a>.</p><p>Why did OMERS post a 4.6% return last year and CDPQ a 7.2% return?</p><p>OMERS is a pension plan which manages assets and liabilities, like OTPP, and it has more exposure to private markets which didn't fare well last year. </p><p>It also has a different approach to privates than CDPQ, doing more direct investing in private equity.</p><p>Moreover, in public equities, OMERS takes more of a value investing approach and has less tech exposure than CDPQ there, and that too impacted returns last year. <br /></p><p>As Jonathan Simmons, OMERS Chief
Financial and Strategy Officer said in the press release:<br /></p><p></p><blockquote>“Returns in 2023 reflected a major divergence between the performance of
public and private assets. Public equities and fixed income had a
strong year and fixed income assets benefitted from higher interest
rates. <b>Returns from private asset strategies were held back by the
increased cost of debt, increased operating costs, and anticipated
slower economic growth, all of which are affecting private market
investors worldwide</b>.” </blockquote><p></p><p>When I spoke to Jonathan in August, <a href="https://pensionpulse.blogspot.com/2023/08/a-conversation-with-omers-cfo-cso-on.html" target="_blank">covering OMERS' mid-year results</a>, he shared some insights with me:</p><div class="col-sm" style="text-align: left;"></div><blockquote><div class="col-sm" style="text-align: left;">Moving
on to Private Equity, I told him people I'm speaking with tell me
profits remain strong, the US consumer remains resilient but there's a
slowdown as financing costs rise and there may be a valuation reset
there.</div><div class="col-sm" style="text-align: left;"><br /></div><div class="col-sm" style="text-align: left;">Jonathan replied: <br /></div><div class="col-sm" style="text-align: left;"></div><blockquote><div class="col-sm" style="text-align: left;">EBITDA growth is slow right now. I would say top line is very healthy <b>but costs are up</b>, specifically in the US. Many of our private equity investments are in US markets<b> and there is certainly wage growth going on there</b>. Cost pressures are keeping EBITDA growth flat.</div><div class="col-sm" style="text-align: left;"> </div><div class="col-sm" style="text-align: left;">As
it relates to multiples, hard to say, the market is very slow right
now, there's not a lot of trades going on right now. I think we are
still going to have to wait and see as to whether the reset happens and
how significant it is. But it's not quite crystalizing yet.</div></blockquote><div class="col-sm" style="text-align: left;"></div><div class="col-sm" style="text-align: left;">In
Real Estate, I told him I just spoke to the Caisse and they told me cap
rates are rising hitting their valuations there, and I also noted
Daniel (Dan) Fournier just took over the helm at Oxford and sometimes
new leaders want to take writedowns on assets they don't like.<br /></div><div class="col-sm" style="text-align: left;"><br /></div><div class="col-sm" style="text-align: left;">Jonathan corrected me immediately:</div><div class="col-sm" style="text-align: left;"></div><blockquote><div class="col-sm" style="text-align: left;">Valuation
is the CFO's responsibility. Valuations sit in my shop, not in the
asset classes. And Daniel is great, we are so pleased to have him in our
team.</div><div class="col-sm" style="text-align: left;"><br /></div><div class="col-sm" style="text-align: left;">I
think cap rates is where it's at in that sector. Cap rates are
changing. Underlying performance of operations is actually quite healthy<b> but interest costs are up and cap rates are up</b> and that's really what is holding back the performance in that segment of our business.</div></blockquote></blockquote><blockquote><div class="col-sm" style="text-align: left;"></div></blockquote><div class="col-sm" style="text-align: left;"></div>What I found interesting is what OMERS CEO Blake Hutcheson told the Globe and Mail, namely, all real estate sectors got hit last year, including Industrials, as cap rates climbed with interest rates and the economy slowed.</div></div><p>Blake thinks better days lie ahead for real estate as rates peak and he should know, he used to be head of Oxford Properties.</p><p>I'm not sure how much central banks will lower rates this year but rest assured, it will be a lot less than markets anticipate unless a crisis unfolds.</p><p>Real estate remains an asset class in transition, some segments will continue to struggle, others will chug along fine. You need to remain well diversified across economies and sectors.</p><p>OMERS Infrastructure posted a decent return of 5.5% last year.</p><p>Michael Hill, the <a href="https://pensionpulse.blogspot.com/2023/08/omers-names-new-head-of-infrastructure.html" target="_blank">new head of Infrastructure</a>, has been busy revamping that team over there and despite the significant <a href="https://pensionpulse.blogspot.com/2024/01/on-discrepancy-between-omers-and-usss.html" target="_blank">writedown of Thames Water</a>, they were still able to generate a 5.5% gain last year.</p><p>That too speaks to the diversification on that portfolio and how resilient it remains in challenging markets.</p><p>In Infrastructure specifically, I note this in the <a href="https://www.omers.com/annual-reporting#" target="_blank">2023 annual report</a>: <br /></p><p></p><blockquote><p>Infrastructure assets generated a net return of 5.5%, compared to our 2023 benchmark of 7.7% (2022 –<br />net return of 12.5%). This equates to net investment income of $1.5 billion in 2023 (2022 – $2.9 billion) and an operating cash yield of 3.5% in 2023, compared to 3.1% in 2022. Currency effects decreased the 2023 return by 0.4%.</p><p>Our returns were supported by steady income generation and valuation gains from operational performance across several assets, particularly in the energy and utilities sector, which benefitted from inflationary tailwinds and recent regulatory outcomes.<b> Overall performance was adversely impacted by unrealized losses from operational underperformance in a few specific assets in the energy and utilities and transportation sectors. </b><br /></p></blockquote><p>In Private Equity, I note this:</p><p></p><blockquote><p>Private equity assets generated a net return of 3.9% in 2023, compared to our 2023 absolute return benchmark of 9.6% (2022 – net return of 13.7%). This equates to net investment income of $0.9 billion in2023 (2022 – net investment income of $2.6 billion). Currency effects decreased the 2023 return by 1.6%.</p><p>Our private equity returns were driven by organic EBITDA growth and accretive M&A activities across our portfolio companies, particularly in our business services, healthcare and industrial verticals. <b>However, EBITDA growth across the portfolio was weaker than plan given the challenging macro environment impacting top-line growth and operating margins. Valuations for high-quality and recession-resilient assets we own generally remained stable throughout the year – though the valuations of our software and technology assets, which primarily reside in our ventures and growth equity strategies and comprise less than 2.3% of OMERS assets, were negatively impacted by operational underperformance in some assets and lower valuation multiples. </b></p></blockquote><p>Lastly, in Real Estate, I note this:</p><p></p><blockquote><p>Real estate assets generated a net loss of 7.2%, compared to our 2023 benchmark of 6.3% (2022 – net<br />return of 13.6%). This equates to net investment loss of $1.5 billion in 2023 (2022 – net investment income of $2.6 billion). Currency effects decreased the 2023return by 0.6%.</p><p><b>Our performance in 2023 was impacted by valuation declines as higher long-term borrowing costs increased discount rates and terminal capitalization rates across all sectors. In particular, the office sector, which represents 21% of Oxford’s real estate portfolio, came under the most strain. Despite low vacancy rates in Oxford’s office portfolio, negative market sentiment from investors towards the asset class resulted in lower valuations. While pricing declines were also experienced in other real estate asset classes, these were partially offset by valuation increases from favourable leasing mainly in our industrial and retail sectors. Oxford’s stable income from property operations continues to outperform budget</b>.</p></blockquote><p>And in the spirit of transparency, the summary compensation table covering senior officers at OMERS (except the heads of subsidiaries who also get paid very well): <br /></p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEitUlrBauQMD_XzKuAVTXke7XaP2HoleAGrSndiDdz8IF2ckyCX3d6f2ez5ANKfZ8CTvyOpUTd-tywO9lws5WslEySN5KGaeaJwvYRCJyeob1k3V7nUoWqhY_e-dkaF-ZPbhA5_A20k-RtcDMgY1wBtnma3g0TmcT3lMkmf603K_V8F2kXt9vhtrRT5_I2e/s832/OMERS%20summary%20compensation%20table.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="794" data-original-width="832" height="610" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEitUlrBauQMD_XzKuAVTXke7XaP2HoleAGrSndiDdz8IF2ckyCX3d6f2ez5ANKfZ8CTvyOpUTd-tywO9lws5WslEySN5KGaeaJwvYRCJyeob1k3V7nUoWqhY_e-dkaF-ZPbhA5_A20k-RtcDMgY1wBtnma3g0TmcT3lMkmf603K_V8F2kXt9vhtrRT5_I2e/w640-h610/OMERS%20summary%20compensation%20table.jpg" width="640" /></a></div>I would encourage my readers to read the <a href="https://www.omers.com/annual-reporting#" target="_blank">2023 annual report</a> carefully for a full discussion on compensation and lot more.<p></p><p>Keep in mind what ultimately counts is the funded status which crept
up to 97% last year and long-term returns which are stable, <b>that's where the focus
should be</b>:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhsf6OAV-lARvwEImyZLEnTxLbaAyLXmZxb_JH9Sw_rti9VrDshA1IRFMokO8wvjk_9nAdBZM3kBREglS8y24BSHLTLLUXx93_TMgfuGMmAmXKN_Gog4TcBFKUG5iXPSdViQnP3b0WS7TcxsqdV7fU3AMVdknWMNrWinfmpL1m6CkLBb0XLU9moA2JDktjI/s1071/OMERS%20long%20term%20returns.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="289" data-original-width="1071" height="172" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhsf6OAV-lARvwEImyZLEnTxLbaAyLXmZxb_JH9Sw_rti9VrDshA1IRFMokO8wvjk_9nAdBZM3kBREglS8y24BSHLTLLUXx93_TMgfuGMmAmXKN_Gog4TcBFKUG5iXPSdViQnP3b0WS7TcxsqdV7fU3AMVdknWMNrWinfmpL1m6CkLBb0XLU9moA2JDktjI/w640-h172/OMERS%20long%20term%20returns.jpg" width="640" /></a></div><p>Also worth mentioning that OMERS is a bit of a different beast because <b>it manages third party
monies</b>, so they do things differently there than other large Canadian
pension funds but still maintain the focus on funding and diversification.</p><p>Finally, it's worth reading my recent comment on how <a href="http://pensionpulse.blogspot.com/2024/02/omers-contributes-far-more-than-137.html" target="_blank">OMERS contributes far more than $13.7 billion to Ontario's GDP</a>.</p><p>I know a lot of people are off this week in Quebec, last week in Ontario, and I know I have some catching up to do but bear with me as I'm still recuperating at home from back surgery (going well). <br /></p><p>Below, the Ontario Business Lifetime Achievement Award is given to a leader
who demonstrates outstanding leadership throughout their career and has
made a significant and positive impact on the province and beyond. </p><p>This
year’s award recipient is Blake Hutcheson, President and CEO of OMERS.
Take the time to watch the interview below and learn more about
Huntville's man.</p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/C4VwAK6U6jg?si=hMLHOQfs0INd28Cj" title="YouTube video player" width="640"></iframe>Leo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.com0tag:blogger.com,1999:blog-5879608286191780679.post-91357110895124515702024-02-22T18:45:00.011-05:002024-02-23T04:21:11.868-05:00CDPQ Posts 7.2% Return in 2023<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiW9oUZkcBCHzJt4OXwIPiDHB8WN1AqI0j2iHSg1cvzPvOt0sCB4eSLETqaJV2TJXLE4VuBQEbA1-Y3Iy1tNVRx94_xi-3M4YwsQVNQP2UTwXT34do3EdTPuDC1bRqLVtFAiOwHylr1y38mDiTa4uc0M58eeSjfwDWbr9Y0bBQSj4YMXxkFuInIUpfk6ybP/s924/Charles-Nathalie-Vincent.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="616" data-original-width="924" height="266" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiW9oUZkcBCHzJt4OXwIPiDHB8WN1AqI0j2iHSg1cvzPvOt0sCB4eSLETqaJV2TJXLE4VuBQEbA1-Y3Iy1tNVRx94_xi-3M4YwsQVNQP2UTwXT34do3EdTPuDC1bRqLVtFAiOwHylr1y38mDiTa4uc0M58eeSjfwDWbr9Y0bBQSj4YMXxkFuInIUpfk6ybP/w400-h266/Charles-Nathalie-Vincent.jpg" width="400" /></a></div>Palash Gosh of Pension & Investments <a href="https://www.pionline.com/pension-funds/cdpq-posts-72-return-2023" target="_blank">reports</a> CDPQ posts 7.2% return in 2023:<p></p><p class="paragraph-newsletter-1" id="first-graph"></p><blockquote><p class="paragraph-newsletter-1" id="first-graph">Caisse de Depot et
Placement du Quebec, Montreal, delivered a net return of 7.2% in
calendar year 2023, slightly below the benchmark return of 7.3%.</p>
<p class="paragraph-newsletter-2"><b>For the five-year period, CDPQ
returned an annualized 6.4%, above the 5.9% of the benchmark, said a
Feb. 22 release. Over the 10-year period, the annualized return was
7.4%, compared with 6.5% for the benchmark.</b></p>
<p class="paragraph-newsletter-3">As of Dec. 31, CDPQ's net assets totaled C$434 billion ($327.4 billion), up from C$402 billion at the end of 2022.</p>
<p class="inline-ad-para paragraph-newsletter-4">In 2022, CDPQ returned a net -5.6%, above the benchmark return of -8.3%.</p><div class="crain-advertisement mobile-tablet-desktop adscount0">
</div><div class="crain-advertisement all native_sponsor adscount1"></div>
<p class="paragraph-newsletter-5"><b>For 2023, by asset class, equities,
which comprises equity markets and private equity, returned a net 10.1%,
below its benchmark of 14.3%.</b></p>
<p class="paragraph-newsletter-6">For the five-year and 10-year periods,
equities returned a net 10.9% and 10.7%, respectively, compared with
benchmarks of 11.2% and 9.6%.</p>
<p class="paragraph-newsletter-7"><b>With respect to public equities, CDPQ
noted that since 2020, a "few large public U.S. tech companies have
dominated the performance of the main stock indexes, creating a
phenomenon of historically concentrated gains," CDPQ said in the
release. CDPQ's own public equities portfolio saw its performance
"driven by growth stocks, as well as by large positions in Quebec
companies, which performed well."</b> <br /></p><p class="inline-ad-para paragraph-newsletter-8"><b>The private equity
portfolio was affected by interest rate hikes as well as by an increase
in financing costs, which affected certain private companies.</b></p>
<p class="paragraph-newsletter-9"><b>"This slowdown was expected after the
portfolio produced considerable returns in recent years," CDPQ noted.
"Some sectors were hit harder, including healthcare as it returned to
normal activities following years of high volumes related to the
pandemic. In contrast, private investments in Quebec generated good
returns."</b></p>
<p class="paragraph-newsletter-10"><b>Fixed income returned a net 8.1%, above its benchmark of 7.7%, in 2023.</b></p>
<p class="paragraph-newsletter-11">For the five-year and 10-year
periods, fixed income returned a net 1.7% and 2.9%, respectively,
compared with benchmarks of 0.8% and 2.1%.</p>
<p class="inline-ad-para paragraph-newsletter-12">Regarding the pension
fund's bond assets, CDPQ said the fixed income market was characterized
by higher yields and the narrowing of corporate credit spreads.</p>
<p class="paragraph-newsletter-13"><b>"Volatility remained a highlight
during the year: 10‑year bond yields fluctuated between 3.3% and 5.0%,
finishing the year stable in the U.S. and down 0.2% in Canada," CDPQ
added.</b></p>
<p class="paragraph-newsletter-14"><b>CDPQ partly attributed the one-year
outperformance of fixed income to the portfolio's "positioning in
government debt, which benefited from lower rates in certain emerging
countries, good execution in corporate credit and premiums on private
debt that foster a high current return."</b></p>
<p class="paragraph-newsletter-15"><b>Real assets (which comprise the real
estate and infrastructure portfolios) returned a net 2.2%, but that
still beat its benchmark of -4.3%.</b></p>
<p class="paragraph-newsletter-16">For the five-year and 10-year
periods, real assets returned a net 4.1% and 7%, respectively, compared
with benchmarks of 3.3% and 6.6%.</p>
<p class="paragraph-newsletter-17"><b>Concerning its real assets portfolio,
CDPQ noted that the real estate sector had to contend with structural
trends in its industry, while the infrastructure portfolio "sustained
its momentum of recent years by continuing to provide a good combination
of protection against inflation and attractive current returns."</b></p>
<p class="paragraph-newsletter-18">Within infrastructure, assets in
essential sectors such as transportation and renewable energy were among
the performance drivers in 2023.</p></blockquote><p class="paragraph-newsletter-18"></p><p></p><p>Mathieu Dion of Bloomberg <a href="https://www.bnnbloomberg.ca/quebec-pension-hit-with-real-estate-loss-as-hostile-market-persists-1.2038021" target="_blank">reports</a> Quebec pension hit with real estate loss as 'hostile' market persists: <br /></p><div class="article-text"><p></p><blockquote><p>Quebec’s public pension manager reported a
7.2 per cent return in 2023, as losses in real estate detracted from big
gains in its credit and stock portfolios.</p>
<p>Caisse de Depot et Placement du Quebec has restructured its real
estate business, shifting capital to apartments and industrial
properties, but it wasn’t enough to offset problems in the office
sector. The fund manager posted a 6.2 per cent loss on its $46 billion
property portfolio — the only asset class for which it had a negative
return last year. </p>
<p><b>Nathalie Palladitcheff, the head of Ivanhoe Cambridge, CDPQ’s real
estate arm, described last year’s environment as “hostile.” High
interest rates and low occupancy have created a difficult outlook for
office owners and their lenders, with more than $1 trillion in
commercial real estate loans set to mature by the end of next year.</b></p>
<p><b>“The increase in rates impacts both the valuation and the cost of
debt, and this resulted in a very significant drop in transactional
volumes on a global scale,” Palladitcheff said, referring to the broader
real estate market. “They have been halved in Europe, halved in the
United States, even an 80 per cent drop in transactions in Germany, for
example.”</b></p>
<p><b>In equity markets, Canada’s second-largest pension fund benefited
from its high exposure to the technology sector with a 17.7 per cent
gain.</b> <b>But CDPQ’s private equity portfolio recorded just a 1 per cent
increase, as rising financing costs impacted private companies</b>.</p>
<p>The fund’s net assets grew by $32 billion to end last year at $434
billion. It’s a shift from 2022’s results, when the firm posted its
worst annual return since the global financial crisis.</p>
<p><b>CDPQ’s assets under management have grown by almost $100 billion since the beginning of 2020.</b></p>
<p><b>“We may reach a crossroads in the year ahead, with many central banks
likely to pivot, but the scope and sequence remain unknown,” CDPQ Chief
Executive Officer Charles Emond said in a statement. “With a backdrop
of downward but persistent inflationary pressure combined with lingering
volatility, our portfolio remains well-positioned to keep delivering
the long-term returns our depositors need.”</b></p></blockquote><p></p>
</div><p>Earlier today, CDPQ issued a <a href="https://www.cdpq.com/en/news/pressreleases/cdpq-posted-72-one-year-return-net-assets-reached-434-billion-32-billion" target="_blank">press release</a> stating it<span class="field field--name-title field--type-string field--label-hidden"> posted a 7.2% one-year return and net assets reached $434 billion, up $32 billion: <br /></span></p><div class="paragraph paragraph-reskin paragraph__1col-text-v2 border-transparent">
<div class="pt__content p__content content-small">
<div class="pt__text">
<p></p></div></div></div><blockquote><div class="paragraph paragraph-reskin paragraph__1col-text-v2 border-transparent"><div class="pt__content p__content content-small"><div class="pt__text"><p>CDPQ today presented its financial results for the year
ended December 31, 2023. The weighted average return on its depositors’
funds was 7.2% in 2023, in line with its benchmark portfolio’s
7.3% return. Over five years, the annualized return was 6.4%, outpacing
the 5.9% of the benchmark portfolio, which represents close to
$12 billion in value added. <b>Over ten years, the annualized return
was 7.4%, also higher than its benchmark portfolio which stood at 6.5%,
producing over $28 billion in value added. As at December 31, 2023,
CDPQ’s net assets totalled $434 billion</b>.</p><blockquote class="blockquote--leftborder"><p><b>“The
year 2023 was marked by highly volatile bond markets and a historic
concentration of gains from a handful of U.S. tech stocks that drove the
main stock indexes. Faced with this context, our portfolio performed
well, and our depositors’ plans continue to be in excellent financial
health,” <i>said Charles</i> <i>Emond, President and Chief Executive Officer of</i> <i>CDPQ.</i></b></p></blockquote><blockquote class="blockquote--leftborder"><p>“Since
2020, investors have had to weather market conditions that ranged from
one extreme to the other. In such environments, our portfolio has grown
by nearly $100 billion over the period. We may reach a crossroads in the
year ahead, with many central banks likely to pivot, but the scope and
sequence remain unknown. <b>With a backdrop of downward but persistent
inflationary pressure combined with lingering volatility, our portfolio
remains well positioned to keep delivering the long-term returns our
depositors need</b>,” <i>concluded Charles</i> <i>Emond.</i></p></blockquote><h2>Return highlights</h2><p>In
the past few years, there has been a more pronounced variation in
returns, year over year, in most asset classes. This is particularly the
case for stock and bond markets, which, following a severe and
simultaneous correction in 2022, bolstered CDPQ’s performance in 2023.
<b>Following a period of considerable returns, private equity was affected
by the sharp rise in rates and the economic slowdown. Impacted by the
same economic factors, the Real Estate portfolio—which posted the best
return in 2022—also had to contend with structural trends in its
industry. The Infrastructure portfolio sustained its momentum of recent
years by continuing to provide a good combination of protection against
inflation and attractive current returns.</b></p><p>CDPQ manages the funds
of 48 depositors and adapts investment strategies to meet their
objectives, taking into account their different risk tolerances and
investment policies. The portfolio’s one-year, five-year and ten-year
returns represent the weighted average of these funds. <b>In 2023, the
spread in the returns for CDPQ’s eight main depositors was fairly wide,
ranging from 6.3% to 9.3% for one year. Over longer periods, the
annualized return on their funds varied between 4.9% and 7.3% over
five years, and between 6.2% and 8.3% over ten years.</b></p>
</div>
</div>
</div>
<div class="paragraph paragraph-reskin paragraph__images border-transparent">
<div class="p__content pi__content content-narrow">
<div class="pi__items d-flex flex-column flex-md-row">
<div class="pi__item d-flex justify-content-center">
<figure class="w-100 w-md-75 align-center mt-5 mb-5">
<img alt="Results by asset class." class="img-fluid" height="139" src="https://www.cdpq.com/sites/default/files/styles/webp/public/medias/img/en/1_2023_rendements_categories_actif_en.png.webp?itok=4tkVmRv3" width="640" />
</figure>
</div>
</div>
</div>
</div>
<div class="paragraph paragraph-reskin paragraph__1col-text-v2 extra-padding--bottom border-transparent">
<div class="pt__content p__content content-small">
<div class="pt__text">
<p>CDPQ’s investment results totalled $28 billion for one year, $108 billion over five years and $207 billion over ten years.</p><h3>Fixed Income: Bonds lifted by higher yields, outpace their index</h3><p>The
2023 bond market was characterized by higher yields and the narrowing
of corporate credit spreads. <b>Volatility remained a highlight during the
year: 10‑year bond yields fluctuated between 3.3% and 5.0%, finishing
the year stable in the United States and down 0.2% in Canada</b>. <b>For
one year, the asset class posted an 8.1% return, compared with 7.7% for
its benchmark index</b>. This return is in part attributable to the
portfolio’s positioning in government debt, which benefited from lower
rates in certain emerging countries, good execution in corporate credit
and premiums on private debt that foster a high current return.</p><p><b>Over
five years, the asset class posted a 1.7% annualized return, which was
limited by the weaker performance in 2022 in the wake of historic rate
hikes, but remains above its index’s 0.8% return</b>. Over the period, it
benefited from<b> private credit activities, an important driver of
performance</b>, thanks in part to the high current return on this kind of
debt and the favourable execution of all mandates.</p><h3>Real Assets</h3><p>Real
Assets is a class composed of the Real Estate and Infrastructure
portfolios, which have quite different industry challenges.</p><p><u>Infrastructure: Assets that continue to perform well against inflationary pressure</u></p><p><b>In
2023, the portfolio continued its good performance of recent years,
generating a 9.6% return against an index at 0.3%</b>. Assets in essential
sectors such as transportation and renewable energy were among the
performance drivers, as was the current return. With slower transaction
activity in 2023, the team remained disciplined in managing its
portfolio, both in selecting acquisitions and in sales and syndication
activities.</p><p><b>Over five years, the annualized return was 9.5%, above
its index’s 5.9%, primarily due to investments in renewable and
transition energy and in port and telecommunications assets</b>.</p><p><u>Real Estate: Lower performance, but above the index in a transforming industry</u></p><p>The
market was difficult for real estate in 2023, which is reflected by the
benchmark index’s -10.0% one-year return. Despite economic challenges
and structural issues in some sectors such as offices, the Real Estate
portfolio demonstrated more resilience, and the repositioning toward
promising sectors such as logistics that began in 2020 mitigated the
decrease in value. <b>As such, the portfolio recorded a -6.2% return for
one year, above its index. In 2023, teams remained selective in the
slowest transactional market in 15 years, with acquisitions in promising
sectors of the future aligned with the portfolio’s evolution, as well
as disciplined dispositions.</b></p><p><b>Over five years, the annualized
return was -0.5%, compared with 0.8% for the index, notably due to the
portfolio’s overweighting in Canadian shopping centres at the beginning
of the period</b>. The strategic repositioning over the last few years,
which represented around 300 transactions totalling over $50 billion, is
nevertheless bearing fruit: <b>since the pivot, $5.5 billion in value
added has been generated compared with the benchmark index.</b></p><h3>Equities</h3><p>The
Equities asset class is composed of Equity Markets and Private Equity,
which have seen vastly different market conditions in recent years.</p><p><u>Equity Markets: High return, above the index in a hyper-concentrated market</u></p><p><b>Since
2020, a few large public U.S. tech companies have dominated the
performance of the main stock indexes, creating a phenomenon of
historically concentrated gains. For example, this handful of stocks
represented 63% of the S&P 500’s performance in 2023.</b> <b>In this
context, the Equity Markets portfolio, which is more diversified in its
allocation to different sectors, outperformed its index’s 17.4% with a
return of 17.7% for one year</b>. The results were driven by growth stocks,
as well as by large positions in Québec companies, which performed well.</p><p><b>Over
five years, the portfolio recorded an annualized return of 9.0%, below
its index’s 10.0%, due to lower exposure to large U.S. growth and tech
stocks at the beginning of the period</b>. The current exposure enables
leveraging the potential of these stocks, while avoiding an
overconcentration as evidenced in the markets.</p><p><u>Private Equity: Following a period of strong returns, rate hikes affect the</u> <u>portfolio</u></p><p><b>For
one year, the portfolio posted 1.0%, below the 10.5% of its index,
which partially reflects public stock indexes. The increase in financing
costs, which affected certain private companies, impacted this return.
This slowdown was expected after the portfolio produced considerable
returns in recent years.</b> Some sectors were hit harder, including health
care as it returned to normal activities following years of high volumes
related to the pandemic. In contrast, private investments in Québec
generated good returns. The Private Equity team rigorously pursued the
plan to monetize certain assets, with strategic sales achieved during
the year.</p><p><b>Over five years, the annualized return was 14.0%, above
its index’s 12.4%, due to the careful selection of direct portfolio
investments in the technology, financial and consumer goods sectors.</b></p><h2>All teams rallied to fully play our role in Québec’s economic development</h2><p><b>In
2023, CDPQ’s assets in Québec rose significantly toward its ambition
of $100 billion in 2026, with an increase of $10 billion in one year,
bringing the total to $88 billion.</b></p><blockquote class="blockquote--leftborder"><p>“<b>In
2023, our investments in Québec made a solid contribution to our
results. I’m especially proud of our teams’ work across all asset
classes, who, together, leveraged their expertise and networks to meet
the growth and international expansion objectives of Québec companies</b>.
They also took part in different major structuring projects and
supported the climate transition, which are central to Québec’s economic
development,” <i>noted Charles</i> <i>Emond.</i></p></blockquote><p>Some achievements during the year:</p><p><i>Support for growing Québec’s companies and expertise</i></p><ul><li>An investment in <b>Cogeco Communications</b>,
a Québec leader that ranks among the top 10 cable companies in North
America, following the purchase of a block of shares held by Rogers
Communications Inc. Already a partner in Cogeco’s expansion over the
last few years, CDPQ now holds $350 million in the company’s capital and
will continue to support its North American growth.</li><li>An investment in <b>Solotech</b>,
a global leader in audiovisual and entertainment technology, to
facilitate its international expansion. This is the largest financial
investment in the company in 10 years, and a return by CDPQ as
a shareholder.</li><li>An investment in <b>Vooban</b>, a
rapidly growing Québec company in applied artificial intelligence
services, to support its growth and expansion ambitions, particularly in
Ontario and the United States.</li><li>Most recently, support for <b>Metro Supply Chain’s</b> acquisition of SCI Group Inc., representing the group’s 10th acquisition since partnering with CDPQ in 2018.</li></ul><p><i>Major real estate and infrastructure projects</i></p><ul><li>Achievement of a milestone in delivering the <b>REM</b>
with the commissioning of the South Shore Branch between Gare Centrale
Station and Brossard on July 31, 2023. Once completed, the 67-km project
will represent the longest automated light metro line in the world.</li><li>Conclusion
of an agreement in principle with the Government of Québec for Ivanhoé
Cambridge to conduct a feasibility study on converting part of the old
Royal Victoria Hospital site into a <b>world-class university campus</b>.</li><li>A $355-million investment to acquire 50% of the <b>A25 Concession</b>, a 7.2-km network comprised of a toll road and bridge on the A25 in Montréal from Transurban, an Australian company.</li><li>Mandate awarded to CDPQ Infra to recommend one or more solutions for <b>a structuring transportation project for the Communauté métropolitaine de</b> <b>Québec</b>.</li><li>Cadence, a consortium that includes CDPQ Infra, qualified alongside two others for the procurement process of the <b>High Frequency Rail (HFR) project between Québec City and</b> <b>Toronto</b>.</li></ul><p><i>Investments in support of a more sustainable economy</i></p><ul><li>In the promising battery sector, financing of around $200 million (USD 150 million) in convertible debt in <b>Northvolt AB</b>
to contribute to completing the Northvolt Six project, a fully
integrated battery plant in Saint‑Basile‑le‑Grand and McMasterville
in Québec.</li><li>An additional investment in <b>Boralex</b>, a renewable energy leader specialized in wind, solar, hydroelectricity and storage, bringing CDPQ’s stake to 15%.</li></ul><p>Also of note is the ambition to more than double the size of amounts entrusted to <b>external Québec managers</b>, to reach $8 billion by 2028, and thereby promote the growth of the asset management industry in its local market.</p><h2>Strong and internationally recognized leadership in sustainable investing</h2><p>In
2023, through its initiatives and international recognition, CDPQ
continued to exercise strong leadership in sustainable investing.<b> For
example, Ivanhoé Cambridge became the first real estate investor to
issue a senior unsecured sustainability bond obligation in Canada in the
amount of $300 million.</b></p><p>In addition, CDPQ ranked first in the
world, alongside three other international investors, in the Global
SWF’s 2023 GSR ranking, a benchmark in assessing the governance,
sustainability and resilience practices of 200 sovereign wealth and
pension funds worldwide. CDPQ was also the first Canadian pension fund
to receive the Terra Carta Seal from the Sustainable Markets Initiative
in recognition of its leadership on sustainability.</p><p>More details
on CDPQ’s sustainable investing strategy, including its progress on
climate targets, the advancement of its commitments and initiatives in
terms of diversity, equity and inclusion, as well as governance, will be
presented in the Sustainable Investing Report published in the spring.</p><h2>Integration of the real estate subsidiaries</h2><p>In
January 2024, CDPQ announced the integration of the activities of its
real estate subsidiaries—Ivanhoé Cambridge and Otéra Capital—to enable
greater focus on investment expertise and generate agility and
efficiency gains.<b> As such, the subsidiaries’ investment teams will
become investment groups within CDPQ on April 29, 2024, and will
continue to conduct their activities in the market under their
respective brands, Ivanhoé Cambridge and Otéra Capital.</b> In addition, the
corporate services teams already report to their counterparts at CDPQ.
<b>At the conclusion of the integration, CDPQ expects to generate annual
savings of around $100 million through the synergies achieved in its
processes, resources and systems. The integration will conclude
within 18 to 24 months</b>.</p><h2>Financial reporting</h2><p>CDPQ incurs
costs to conduct its activities, including operating expenses, external
management fees and transaction costs. As at December 31, 2023, the
total cost for internal and external investment management was 59 cents
per $100 of average net assets, compared with 48 cents per $100 of
average net assets in 2022. This total is up from the prior year due to
fees associated with higher asset performance. Operating expenses
remained stable at 22 cents per $100 of average net assets. CDPQ’s cost
ratio compares favourably with that of its peers.</p><p>The credit
rating agencies reaffirmed CDPQ’s investment-grade ratings with a stable
outlook, namely AAA (DBRS), AAA (S&P), Aaa (Moody’s) and AAA
(Fitch Ratings).</p>
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<img alt="Returns Table." class="img-fluid" src="https://www.cdpq.com/sites/default/files/styles/webp/public/medias/img/en/2_2023_tableau_rendements_en.png.webp?itok=24pTnj9q" />
</figure>
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<h3 class="title-inter-sm">ABOUT CDPQ</h3>
<p>At CDPQ, we invest constructively to generate sustainable returns
over the long term. As a global investment group managing funds for
public pension and insurance plans, we work alongside our partners to
build enterprises that drive performance and progress. We are active in
the major financial markets, private equity, infrastructure, real estate
and private debt. As at December 31, 2023, CDPQ’s net assets totalled
CAD 434 billion. For more information, visit <a href="https://www.cdpq.com/en">cdpq.com</a>, consult our <a href="https://www.linkedin.com/company/cdpq" rel="noopener noreferrer" target="_blank">LinkedIn</a> or <a href="https://www.instagram.com/lacdpq/" rel="noopener noreferrer" target="_blank">Instagram</a> pages, or follow us on <a href="https://twitter.com/LaCDPQ" rel="noopener noreferrer" target="_blank">X</a>.</p></blockquote><p></p><p></p><p><span class="field field--name-title field--type-string field--label-hidden">Let me begin by apologizing to Charles Emond as I didn't reach out to him today for extra comments because I'm preparing for my second back surgery tomorrow and was on the phone with the hospital and preparing for that surgery.</span></p><p><span class="field field--name-title field--type-string field--label-hidden">Dr. Aoude did wonders back in April of last year as decompression surgery worked perfectly </span><span class="field field--name-title field--type-string field--label-hidden">on my right side</span><span class="field field--name-title field--type-string field--label-hidden"> but the left side was a problem because it's <a href="https://my.clevelandclinic.org/health/diseases/24856-foraminal-stenosis" target="_blank">foraminal lumbar stenosis</a> and decompression doesn't work when that's the case as the nerve is difficult to reach without removing disc. Only fusion of my L3-L4 disc which Dr. Jarzem will perform tomorrow can help but there are risks as in any back surgery.</span></p><p><span class="field field--name-title field--type-string field--label-hidden">Nonetheless, the pain is agonizing and I was suppose to do this surgery before Christmas but the Quebec healthcare system is in far worse shape than Quebec's pension fund and when you're sick here, patience and luck are what you need (I'd love to have a coffee with Christian Dubé and Eric Girard who I knew back at National Bank and give them an earful of things they need to do, pronto. I also want to talk to Eric about </span>Quebecers with disabilities and explain why they are <a href="https://montrealgazette.com/news/local-news/quebecers-with-disabilities-fight-against-unfair-pension-penalties" target="_blank">right to fight 'unfair' pension penalties</a><span class="field field--name-title field--type-string field--label-hidden">).</span></p><p><span class="field field--name-title field--type-string field--label-hidden">At least Dr. Jarzem made me laugh yesterday as he reviewed my case with Dr. Aoude to see if he can take me to OR on Friday and saw I was in distressing pain on my left side. I told him: "Dr. Aoude did wonders on my right side, no more pain there but the left side is crippling me." </span></p><p><span class="field field--name-title field--type-string field--label-hidden">Dr. Jarzem replied: "He's the right side specialist, I'm the left side one so you're getting two for the price of one," which made Dr. Aoude and me chuckle. <br /></span></p><p><span class="field field--name-title field--type-string field--label-hidden">Alright, enough on my health issues, hopefully my back surgery goes well and I will recover and be able to walk, stand, sit and sleep again without any intense nerve pain on my left hip, buttock and thigh.</span></p><p><span class="field field--name-title field--type-string field--label-hidden"><b>CDPQ's 2023 results were solid and in line with what I was expecting</b>.</span></p><p><span class="field field--name-title field--type-string field--label-hidden">Let's begin with Real Estate since that is where everyone seems to be focusing on as there are issues there.</span></p><p><span class="field field--name-title field--type-string field--label-hidden">From the Bloomberg article:</span></p><p></p><blockquote><p>Nathalie Palladitcheff, the head of Ivanhoe Cambridge, CDPQ’s real
estate arm, described last year’s environment as “hostile.” <b>High
interest rates and low occupancy have created a difficult outlook for
office owners and their lenders</b>, with more than $1 trillion in
commercial real estate loans set to mature by the end of next year.</p>
<p>“The increase in rates impacts both the valuation and the cost of
debt, and this resulted in a very significant drop in transactional
volumes on a global scale,” Palladitcheff said, referring to the broader
real estate market. <b>“They have been halved in Europe, halved in the
United States, even an 80 per cent drop in transactions in Germany, for
example.</b>”</p></blockquote><p></p><p></p><p><span class="field field--name-title field--type-string field--label-hidden">Ms. Palladitcheff has done wonders repositioning that portfolio, diversifying out of retail into logistics and multifamily but offices remain a problem.</span></p><p><span class="field field--name-title field--type-string field--label-hidden">Also, as she correctly points out, the </span>increase in rates impacts both the valuation and the cost of
debt, and this resulted in a very significant drop in transactional
volumes on a global scale.</p><p>Given the global backdrop in real estate and the lagged performance relative to publicly-traded REITs, I wasn't surprised Real Estate recorded a -6.2% return for
one year, above its index (-10%).</p><p>This has nothing to do with Nathalie Palladitcheff and her team at Ivanhoe Cambridge, <b>all of Canada's major pension funds are going to post losses in their respective real estate portfolios in 2023</b> and I'll be calling out anyone who doesn't mark down assets.</p><p>The good news, or somewhat good news, it wasn't as bad as I feared.</p><p>Recall my recent post on what <a href="http://pensionpulse.blogspot.com/2024/01/what-do-norways-2023-fund-results-mean.html" target="_blank">Norway's 2023 Fund results mean for Canadian pensions</a> where I noted:<br /></p><blockquote><p></p></blockquote><blockquote><blockquote><p>Total real estate investments <b>returned -2.0 percent for the first half and amounted to 3.9 percent of the fund at the end of the period</b>. Unlisted and listed real estate investments are managed under a combined strategy for real estate.</p><p>Unlisted
real estate investments made up 58.4 percent of the overall real estate
portfolio and returned -4.6 percent, while investments in listed real
estate returned 1.7 percent. </p><p><b>The main driver behind the
negative return on unlisted real estate was the office sector, with US
investments in particular falling sharply in value during the period</b>.
This was due mainly to increased vacancy, which means reduced income
for investors. The return on the listed portfolio was also affected by
the negative performance in the US office sector. </p></blockquote><p></p><p>Why is this important?</p><p>Because as at the end of June, unlisted real estate was down 2% and at year-end, <b>it was down 12%</b>.</p><p>That
tells me the Fund's appraisers significantly marked down unlisted real
estate assets in the second half of the year as it became evident office
vacancies weren't getting better and other sectors also faced
challenges as rates hit financing (multifamily).</p><p><b>Importantly,
if Norway's Fund is posting -12% in unlisted real estate, it doesn't
portend well for the unlisted real estate portfolio at Canada's large
pension funds (to be fair, I suspect Norway's Fund has a bit more
exposure to offices but can't confirm this).</b></p><p>There were dramatic markdowns of unlisted real estate assets <b>in the second half of the year</b> and this is worth noting as Canada's large pension funds prepare to report their results.</p><p>I've already told people last week when I covered why <a href="http://pensionpulse.blogspot.com/2024/01/cdpq-to-integrate-its-real-estate.html" target="_blank">CDPQ is integrating its real estate subsidiaries</a>
that I expect a challenging time in real estate as assets were marked
down to reflect the clobbering publicly traded REITs took in 2022.</p></blockquote><p></p><p></p><p><span class="field field--name-title field--type-string field--label-hidden">Why was Norway's unlisted real estate portfolio down 12% whereas CDPQ's real estate portfolio was down half that amount last year?</span></p><p><span class="field field--name-title field--type-string field--label-hidden">The answer is simple, Norway's unlisted real estate portfolio is made up almost exclusively of office properties which got hit hard last year (they are diversifying their unlisted real estate portfolio by sector and geography but given their enormous size, it takes time).</span></p><p><span class="field field--name-title field--type-string field--label-hidden">So, this just proves the repositioning that </span>Nathalie Palladitcheff and her team have accomplished at Ivanhoe Cambridge is working and that's why they're beating their benchmark, adding $5.5 billion in value
added over their benchmark.</p><p>As far as CDPQ integrating its real estate subsidiaries, I posted a comprehensive post with my thoughts <a href="http://pensionpulse.blogspot.com/2024/01/cdpq-to-integrate-its-real-estate.html" target="_blank">here</a>. <br /></p><p>Next, let's move on to Private Equity as high financing costs hit that portfolio too.</p><p>Again, nothing shocking to me, I'm expecting this at all of Canada's large pension funds but some may have fared better than others if their direct investments and distributions (selling assets) kicked in. </p><p>I noted in the press release that some sectors were hit harder, including health care as it returned to normal
activities following years of high volumes related to the pandemic. </p><p>CDPQ's new head of Private Equity Martin Longchamps has excellent experience coming over from PSP Investments and he and his team will maintain the focus on the long run where that portfolio continues to outperform its benchmark nicely.</p><p>Over five years, the annualized return in PE was 14.0%, above its
index’s 12.4%, due to the careful selection of direct portfolio
investments in the technology, financial and consumer goods sectors.</p><p>The Infrastructure portfolio had another solid year, generating a 9.6% return against an index at 0.3%. </p><p>From the press release:</p><p></p><blockquote><p>Assets in essential
sectors such as transportation and renewable energy were among the
performance drivers, as was the current return. With slower transaction
activity in 2023, the team remained disciplined in managing its
portfolio, both in selecting acquisitions and in sales and syndication
activities.</p><p>Over five years, the annualized return was 9.5%, above its index’s 5.9%,
primarily due to investments in renewable and transition energy and in
port and telecommunications assets.</p></blockquote><p></p><p>I recently discussed why CDPQ acquired a <a href="http://pensionpulse.blogspot.com/2024/02/cdpq-acquires-majority-stake-in-japans.html" target="_blank">majority stake in Japan's Inuyama solar project</a> and praised the Infra team for doing solid deals with the right strategic partners.</p><p>Still, even there, asset valuations are rich and higher rates are slowing transaction activity so the team needs to stay focused and nimble.</p><p>Lastly, as far as public markets, we all know what's driving the show in the stock market:</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">BREAKING: Nvidia, <a href="https://twitter.com/search?q=%24NVDA&src=ctag&ref_src=twsrc%5Etfw">$NVDA</a>, adds $277 billion in market cap today marking the biggest ever single day gain in history.<br /><br />This has shattered the previous $197 billion record set by Meta, <a href="https://twitter.com/search?q=%24META&src=ctag&ref_src=twsrc%5Etfw">$META</a>, exactly 20 days ago by over 40%.<br /><br />Truly historic. <a href="https://t.co/5P1yiPpchK">pic.twitter.com/5P1yiPpchK</a></p>— The Kobeissi Letter (@KobeissiLetter) <a href="https://twitter.com/KobeissiLetter/status/1760788381074600332?ref_src=twsrc%5Etfw">February 22, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script> <p></p><p>So far, so good, the insane concentration risk in a few megacap tech stocks hasn't collapsed but I would heed Stanley Druckenmiller's warning prior to the 1987 crash very seriously if this AI mania continues<br /></p><p></p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">Drunkenmiller on the 1987 stock market crash <a href="https://t.co/gsH3efC7h2">pic.twitter.com/gsH3efC7h2</a></p>— HZ (@MFHoz) <a href="https://twitter.com/MFHoz/status/1759975048402616778?ref_src=twsrc%5Etfw">February 20, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script>As far as CDPQ's public markets, I would refer to my conversation with CDPQ's Head of Liquid Markets Vincent Delisle when I covered mid-year results back in August <a href="https://pensionpulse.blogspot.com/2023/08/cdpqs-head-of-liquid-markets-discusses.html" target="_blank">here</a>.<p>Importantly, he explained the change in their quantitative strategy:</p><blockquote><p>Not on the Fixed Income side. When I joined in 2020, the
Fixed Income strategy we have in Private Credit was launched in 2017.
It's been a great performer for CDPQ. We've made some minor adjustments
but it's a vehicle that has provided a very positive contribution so I
haven't been very active on that side.</p><p>In Public Equities, we have
made small adjustments. A lot of things were working but in some
aspects, the portfolio was a bit too concentrated in some defensive
mandates. So in terms of diversification, we diversified through broader
exposure to styles, and that included buying some technology names.</p><p><b>Just
to give you a sense of proportion, in 2020, we had 3.7% of the
portfolio exposed to large cap technology versus today, we are closer to
the 10%. So we are still underweight but we have introduced more
exposure to large cap tech.</b></p><p>Alpha generation was mainly
through fundamental stock picking strategies, both internal and
external. They still dominate the portfolio but we have introduced
quantitative portfolios as well whether it's internal or external. <b> </b></p><p><b>We
currently manage north of $25 billion in internal quant strategies that
are doing very well. It's algorithmic, simple processes, math driven,
that I'm happy we introduced as they complement what we were already
doing very well with the fundamental equities bottom up teams</b>. </p></blockquote><p></p><p>The addition of more tech exposure obviously helped equities but knowing Vincent, he's looking intensely at the macro backdrop to see where the risks <br /></p><p>He also spoke to me about emerging markets debt and how they played the long end well there and also explained why private credit remains a solid outperformer, helping the Fixed Income teams deliver solid returns last year (along with EM debt).</p><p>Also worth noting the Quebec portfolio rose significantly toward its ambition of $100 billion in 2026, with an
increase of $10 billion in one year, bringing the total to $88 billion.</p><p>I commend Kim Thomassin and her team for doing extraordinary work there, adding significant value to the fund and to the overall Quebec economy.</p><p>And I said yesterday, don't be surprised if CDPQ invests in <a href="http://pensionpulse.blogspot.com/2024/02/michael-sabia-pitching-hydro-quebecs.html" target="_blank">Hydro-Quebec's $137 billion Action Plan</a>. <br /></p><p>I'm not a huge fan of pension funds having dual mandates as I worry about governance issues but CDPQ seems to be doing it right.<br /></p><p>All this to say that it was another solid year for CDPQ despite some challenges in the real estate and private equity portfolios which are affecting all funds.</p><p>Lastly, it is worth noting that <span class="field field--name-title field--type-string field--label-hidden">Charles Emond’s mandate as President and Chief Executive Officer of CDPQ <a href="https://www.cdpq.com/en/news/pressreleases/charles-emonds-mandate-president-chief-executive-officer-cdpq-renewed" target="_blank">was renewed recently</a>:</span></p><div class="paragraph paragraph-reskin paragraph__1col-text-v2 extra-padding--bottom border-transparent">
<div class="pt__content p__content content-small">
<div class="pt__text">
<p></p><blockquote><p>Caisse de dépôt et placement du Québec (CDPQ) today
announced that <b>Charles Emond’s mandate has been renewed for a five-year
period concluding on February 6, 2029</b>. This appointment by the CDPQ
Board of Directors was approved today by the Government of Québec
pursuant to the organization’s incorporating act.</p><blockquote class="blockquote--leftborder"><p><b>“Over
the past four years, under Charles Emond’s leadership, CDPQ has
delivered solid results in an atypical environment marked by unusual
market conditions. In this context, and supported by his team, he
introduced key strategic changes to the CDPQ portfolio to generate
results that meet depositors’ needs and create value added. At the same
time, CDPQ significantly grew its assets in Québec and mobilized its
teams around several structuring projects in real estate and
infrastructure,” <i>said Jean St-Gelais, Chairman of CDPQ’s Board of Directors.</i>
“CDPQ will have to continue to navigate a complex context as it
executes its mission in the coming years. As such, and in light of
Charles Emond’s remarkable performance in recent years, the Board of
Directors has decided to renew his mandate now,” <i>he</i> <i>added.</i></b></p></blockquote><blockquote class="blockquote--leftborder"><p><b>“We’re
facing tremendous challenges. The global environment has been volatile
and uncertain since 2020—and that will continue. To achieve our
ambitious objectives and keep striving to serve our depositors better in
these back-to-back extremes, we must continue to evolve as an
organization,” <i>stated Charles Emond, President and Chief Executive Officer of CDPQ.</i>
“We’re privileged to work for an institution whose unique
signature—constructive capital—is a great calling card that opens doors
to the best partners and best opportunities around the world. CDPQ is
also the pension fund most present in its local economy globally. I
would like to thank the Board for their trust and I’m extremely proud to
start this new chapter with the Executive Committee and all our teams.”</b></p></blockquote><p>Mr. Emond’s second mandate is effective today.</p></blockquote><p></p>
</div>
</div>
</div><p></p><p><span class="field field--name-title field--type-string field--label-hidden">As I stated in another post where I mentioned this,
I would have been shocked if Charles's mandate wasn't renewed
over the next five years because he's doing a great job at the helm of
this organization and it's not an easy job (probably one of the most
stressful jobs among Maple Eight CEOs because CDPQ has a dual mandate
and is always under the microscope).</span></p><p></p><p>One last note, it's not fair comparing Norway's 16% return last year to that of any Canadian pension fund simply because the asset mix there is heavily tilted toward public market beta and they have a much higher exposure to the Magnificent Seven stocks that significantly outperformed last year.</p><p>Canada's pension funds are a lot more diversified across public and private markets, they're not looking to shoot the lights out, they are looking to deliver consistent returns to meet their long-dated liabilities.</p><p>Alright, let me end it there, eat something light and go to sleep early to prepare for my surgery tomorrow (have to fast as it's general anesthesia).<br /></p><p>Below, an older interview with CEO Charles Emond where he discusses <span class="style-scope ytd-text-inline-expander" id="snippet-text"><span class="yt-core-attributed-string yt-core-attributed-string--white-space-pre-wrap" role="text"><span class="yt-core-attributed-string--link-inherit-color" style="color: #131313;">the organization's unique "double mandate" - providing long-term financial returns for depositors and providing constructive capital to Quebec's economy.</span></span></span></p><p><span class="style-scope ytd-text-inline-expander" id="snippet-text"><span class="yt-core-attributed-string yt-core-attributed-string--white-space-pre-wrap" role="text"><span class="yt-core-attributed-string--link-inherit-color" style="color: #131313;">Next, I added tonight's interview on Zone Economie (in French) where Charles goes over the results and more.<br /></span></span></span></p><p>
Lastly, Dr. Tony Mork talks about the problems of lumbar foraminal stenosis and how it can be treated in this 2 part series (he's talking up his book in treatments, so take that with grain of salt and listen to your specialist).
</p><p>
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<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/WY13USsp1kA?si=aFTKBU7pIWmyVQ-L" title="YouTube video player" width="640"></iframe></p><p>
<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/1DX5Da2cdt4?si=Ou1YnO7Uo_3oc5iK" title="YouTube video player" width="640"></iframe></p><p>
<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/0Z-XLd9NvEY?si=EnvMpjXZVwaA-5yj" title="YouTube video player" width="640"></iframe> </p><p></p><p></p><p></p><p></p>Leo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.com0tag:blogger.com,1999:blog-5879608286191780679.post-45387710944175863422024-02-21T19:50:00.005-05:002024-02-22T14:57:48.072-05:00Michael Sabia Pitching Hydro-Quebec's $137 Billion Action Plan to Canada's Pensions?<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEikZtwrqySDkDHz1e3KqzxWxYfKMd1aDBBwsKxTzKMMxhPZYIljhlJYqT1NYdYhPDVHRiqRoL7Bc6GghFzJzGQFychOVFr3GDgr1DEFDeb2wSpOaEU9qI2o9O4ov_pOsZB73YhjY3ntzPvacSSz1mmy6Yy8gljxGp3OklBOFAxRuu5Z16hlgQPwSC3sxl20/s705/Sabia.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="445" data-original-width="705" height="253" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEikZtwrqySDkDHz1e3KqzxWxYfKMd1aDBBwsKxTzKMMxhPZYIljhlJYqT1NYdYhPDVHRiqRoL7Bc6GghFzJzGQFychOVFr3GDgr1DEFDeb2wSpOaEU9qI2o9O4ov_pOsZB73YhjY3ntzPvacSSz1mmy6Yy8gljxGp3OklBOFAxRuu5Z16hlgQPwSC3sxl20/w400-h253/Sabia.jpg" width="400" /></a></div>Mathieu <span class="caas-author-byline-collapse" data-id="m-0">Dion and Esteban Duarte of Bloomberg <a href="https://finance.yahoo.com/news/hydro-quebec-ceo-says-137-204310263.html" target="_blank">report</a> </span>Hydro-Quebec’s CEO says $137 billion power plan is drawing attention:<p></p><p></p><blockquote><p>The head of Hydro-Quebec said he’s confident the state-owned utility
will find investors to back a massive expansion of a provincial
electrical grid that’s expected to cost well over $100 billion.</p><p><b>Chief Executive Officer Michael Sabia is pitching what he calls an
“Action Plan” that may amount as much as C$185 billion ($137 billion) to
build new power generation capacity and improve transmission
reliability by 2035. The plan, unveiled in November, would see
Hydro-Quebec’s capacity increase by nearly 25%, allowing the utility to
meet demand for hydroelectricity and fulfill its power export
commitments to the US.</b></p><p><b>“The ambition of the Action Plan has
managed to attract a considerable amount of attention in the financial
markets,” Sabia said at a Wednesday press conference after the company
released annual results. “We’ve also had a lot of very positive incoming
from suppliers, from producers, people who are interested in building
partnerships with us going forward.”</b></p><p></p><p><b>Hydro-Quebec
is in its “very early days” of finding the right solutions to raise the
money from different sources, said Sabia, who didn’t disclose who was
interested. “We’re at the very beginning of having conversations with
them about different ways in which we can partner.”</b></p><p><b>Partnerships don’t necessarily mean equity participation and public debt markets shouldn’t be “neglected,” he said.</b></p><p><b>“Bonds
of Hydro-Quebec are both very green and very liquid,” Sabia said. “That
is a significant financing competitive advantage.”</b></p><p>Hydro-Quebec
has around C$50 billion of long-term debt outstanding, according to its
annual report. The company, which has the fourth-highest investment
grade rating with S&P Global Ratings, is able to raise funding at
similar levels to the Province of Quebec, its sole shareholder. For
example, Hydro-Quebec’s 5-year bond yield in Canada is around 3.94%,
about 6 basis points wider than Quebec’s provincial yield curve,
according to data compiled by Bloomberg.</p><p><b>Lower Profit</b></p><p>Hydro-Quebec
reported annual profit of C$3.3 billion for last year, down 28% from a
record 2022, partly due to below-average water levels at dam reservoirs
that forced the utility to reduce electricity exports to the US.
Quebec’s provincial government will receive a dividend of C$2.5 billion,
slashed by about $900 million compared with last year. <br /></p></blockquote><p>I wasn't going to post tonight as I spent the day at the hospital preparing for a second back surgery but this article caught my attention.</p><p>Michael Sabia, former CDPQ CEO, is now Hydro Quebec's CEO and he knows all about the energy transition economy and the key role electrification will play in the future.</p><p>He also knows he won't have a problem raising C$185 billion ($137 billion) to build new power generation capacity and improve transmission reliability by 2035.</p><p>Michael is plugged into the Maple Eight, obviously knows Charles Emond very well and he knows he can pitch this idea to Canada's mighty pension funds or go to public markets to sell green bonds.</p><p>The advantage of going the private credit route via CDPQ and other large pension funds is he can get better terms and it's a mutually beneficial relationship as pensions have long dated liabilities they need to pay and this project will interest them either through equity stakes or a private debt loan.</p><p>In fact, if Michael pulls this off which he will, he might set in motion something that other large utilities can emulate, bypassing the Canada Infrastructure Bank altogether.</p><p>Yes, Hydro-Quebec is a behemoth and can easily do this with great long-term partners but I like these types of deals and we desperately need to ramp up our power generation capacity to keep up with growing demand and legislative changes forcing the decarbonization of our economy.</p><p>Anyways, it's still early days but I will be tracking Hydro-Quebec's new Action Plan very closely.</p><p>Below, Radio-Canada's Patrice Roy interviews Hydro-Quebec CEO Michael Sabia on the new Action Plan (in French).<br /></p><p>Second, Hydro-Quebec CEO Michael Sabia unveils new action plan and explains why Quebec needs to build new damns (in French). <br /></p><p>Lastly, Michael Sabia presents his vision for Hydro-Quebec's Action Plan. <span class="yt-core-attributed-string yt-core-attributed-string--white-space-pre-wrap"><span class="yt-core-attributed-string--link-inherit-color" style="color: #131313;">Michelle Courchesne, Jean-François Lisée, Françoise Boivin and Dimitri Soudas discuss (in French).</span></span></p><p><span class="yt-core-attributed-string yt-core-attributed-string--white-space-pre-wrap"><span class="yt-core-attributed-string--link-inherit-color" style="color: #131313;">
<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/G2mB6ahX-HY?si=OoxwBaa_4BnQfTm1" title="YouTube video player" width="640"></iframe></span></span></p><p><span class="yt-core-attributed-string yt-core-attributed-string--white-space-pre-wrap"><span class="yt-core-attributed-string--link-inherit-color" style="color: #131313;">
<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/Gc8zvzqtxKA?si=7cr-InIySYelLp6a" title="YouTube video player" width="640"></iframe></span></span></p><p></p><p><span class="yt-core-attributed-string yt-core-attributed-string--white-space-pre-wrap"><span class="yt-core-attributed-string--link-inherit-color" style="color: #131313;"></span></span></p><p><span class="yt-core-attributed-string yt-core-attributed-string--white-space-pre-wrap"><span class="yt-core-attributed-string--link-inherit-color" style="color: #131313;">
<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/L_Lxjk1Y7zk?si=xKCV73CTgFwxEr-7" title="YouTube video player" width="640"></iframe> </span></span></p><p></p><p></p><p></p>Leo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.com0tag:blogger.com,1999:blog-5879608286191780679.post-15087387619130555922024-02-20T18:42:00.005-05:002024-02-20T18:58:24.769-05:00CPP Investments Sells Stake in South Korea's Kendall Square Development Venture<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjEZ_RHaywF-cc6DaLYV98rAJ_NYKBJ7oyN3ridzPZdIpzciIYG7l1pZ_6ZoKrbismDYIw8kWK_GZCoPzZzLIv2epQDVFc5fdldKzK4tmNMXLT0E3KUPNrI_WjP3aI4DYyNqOBS6wXYhs5h1V2jL30jeFe3LTGX9YP4uYkNYCXGBOsAz2CTUcfGusR_4RTO/s800/KDV%20I.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="530" data-original-width="800" height="265" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjEZ_RHaywF-cc6DaLYV98rAJ_NYKBJ7oyN3ridzPZdIpzciIYG7l1pZ_6ZoKrbismDYIw8kWK_GZCoPzZzLIv2epQDVFc5fdldKzK4tmNMXLT0E3KUPNrI_WjP3aI4DYyNqOBS6wXYhs5h1V2jL30jeFe3LTGX9YP4uYkNYCXGBOsAz2CTUcfGusR_4RTO/w400-h265/KDV%20I.jpg" width="400" /></a></div>SWFI <a href="https://www.swfinstitute.org/news/102086/cpp-investments-gets-some-liquidity-from-kendall-square-investment" target="_blank">reports</a> CPP Investments gets some liquidity from Kendall Square investment: <br /><p></p><p></p><blockquote><p>South Korea is one of the most developed e-commerce markets in Asia
with demand for quality logistics facilities. Canada Pension Plan
Investment Board (CPP Investments) announced it has agreed to a
restructure and sale of a 21% partial interest in the Kendall Square
Development Venture (KDV I) in South Korea. Net proceeds to CPP
Investments from the sale will be approximately US$ 245 million.</p> <p><b>KDV
I is a joint venture set up in 2015 among CPP Investments, APG Asset
Management, and ESR Group Limited to develop modern logistics real
estate assets in prime locations within major strategic logistics hubs
in South Korea. CPP Investments’ initial investment in KDV I was US$ 175
million. The joint venture was subsequently upsized in 2018 and 2019.</b></p> <p><b>CPP
Investments will remain an investor with a 24% stake in a newly formed
open-ended logistics core fund, which will house KDV I’s stabilized
assets. CPP Investments is currently partnered with ESR on two other
ventures focused on the Korean logistics sector.</b></p> <p><b>ESR Kendall Square Open-End Core RE Fund</b><br />
On February 14, 2024, ESR Group announced that its South Korean
platform, ESR Kendall Square has established Korea’s first perpetual,
open-ended core logistics fund. The newly-formed core fund portfolio
includes seven trophy assets which are developed and managed by ESR
Kendall Square. <b>Strategically located in the Greater Seoul and Greater
Busan areas, the initial seven assets, with a total Gross Floor Area of 1
million square meters, have an average occupancy of over 99%</b>.</p></blockquote><p></p><p>Earlier today, CPP Investments issued a <a href="https://www.cppinvestments.com/newsroom/cpp-investments-sells-partial-stake-in-korea-development-venture/" target="_blank">press release</a> stating it will sell a partial stake in Korea development venture:</p><p><b></b></p><blockquote><p><b>Seoul/Hong Kong (February 20, 2024) </b>– Canada Pension Plan Investment Board (<a aria-label="link tag 4" href="https://www.cppinvestments.com/">CPP Investments</a>)
today announced it has agreed to a restructure and sale of a 21%
partial interest in the Kendall Square Development Venture (KDV I) in
South Korea. <b>Net proceeds to CPP Investments from the sale will be
approximately US$245 million</b>.</p>
<p><b>KDV I is a joint venture set up in 2015 among CPP Investments, APG
and ESR to develop modern logistics real estate assets in prime
locations within major strategic logistics hubs in South Korea. CPP
Investments’ initial investment in KDV I was US$175 million. The joint
venture was subsequently upsized in 2018 and 2019.</b></p>
<p><b>CPP Investments will remain an investor with a 24% stake in a newly
formed open-ended logistics core fund, which will house KDV I’s
stabilized assets. CPP Investments is currently partnered with ESR on
two other ventures focused on the Korean logistics sector.</b></p>
<p><b>Gilles Chow, Head of Real Estate North Asia, CPP Investments, said,
“Korea is one of the most developed e-commerce markets in Asia with
sustained demand for quality logistics facilities. Through our
longstanding partnership with ESR and APG, we have been able to capture
opportunities in this space. The partial sale of our stake in KDV I
allows us to monetize the investment to deliver returns to the CPP Fund
while remaining committed to this important sector.”</b></p>
<p><b>About CPP Investments</b></p>
<p>Canada Pension Plan Investment Board (CPP Investments™) is a
professional investment management organization that manages the Fund in
the best interest of the more than 22 million contributors and
beneficiaries of the Canada Pension Plan. In order to build diversified
portfolios of assets, investments are made around the world in public
equities, private equities, real estate, infrastructure and fixed
income. Headquartered in Toronto, with offices in Hong Kong, London,
Luxembourg, Mumbai, New York City, San Francisco, São Paulo and Sydney,
CPP Investments is governed and managed independently of the Canada
Pension Plan and at arm’s length from governments. At December 31, 2023,
the Fund totalled C$590.8 billion. For more information, please visit <a aria-label="link tag 5" href="http://www.cppinvestments.com/">www.cppinvestments.com</a> or follow us on <a aria-label="link tag 6" href="https://www.linkedin.com/company/cppinvestments/">LinkedIn</a>, <a aria-label="link tag 7" href="https://www.instagram.com/cppinvestments/">Instagram</a> or on X <a aria-label="link tag 8" href="https://twitter.com/cppinvestments">@CPPInvestments</a>.</p></blockquote><p></p><p></p><p>Talk about a short press release, straight to the point!!</p><p>So why is CPP Investments selling a stake in the Kendall Square Development Venture?</p><p>Well, to realize on the investment and shore up liquidity. </p><p>The press release states net proceeds from the sale will be approximately US$245 million.</p><p><b>Is CPP Investments in trouble, is that why they are selling assets?</b></p><p>No, that's total nonsense, it's all part of intelligent <b>liquidity risk management</b>. </p><p>CPP Investments' CIO Ed Cass is very smart, he knows the cycle is turning and wants to shore up liquidity to capitalize on opportunities as they arise.</p><p>And prize assets like the Kendall Square Development Venture are easy to sell, even in this environment.</p><p>Moreover, CPP Investments will remain an investor with a 24% stake in a newly
formed open-ended logistics core fund, which will house KDV I’s
stabilized assets. </p><p>In other words, it's not exiting completely from this investment because it's a great long-term asset.</p><p>The best way I can describe it to ordinary investors is let's say you buy a stock at a decent price and it doubles, but you still love the company and its long-term prospects. You might sell 2/3 of your position to invest in other opportunities and lower your exposure and keep a third and ride it.</p><p>It's not exactly the same as real estate is illiquid but it's the same principle, you realize on your investment to invest elsewhere and keep a smaller position.</p><p>That's just smart portfolio management and in the Canadian pension business where over 50% of assets are illiquid, you need to manage all risks including liquidity risk very carefully.</p><p>Anyways, no use belaboring the point, it's a great logistics asset in South Korea and as Gilles Chow, Head of Real Estate North Asia, CPP Investments, said:
“Korea is one of the most developed e-commerce markets in Asia with
sustained demand for quality logistics facilities."</p><p>Moreover, as SWFI noted, it's strategically located in the Greater Seoul and Greater
Busan areas, the initial seven assets, with a total Gross Floor Area of 1
million square meters, have an average occupancy of over 99%.</p><p>These type of logistics assets are in great demand and CPP Investments was right to unlock some liquidity here.</p><p>In other related news, CPP Investments <a href="https://www.cppinvestments.com/newsroom/cpp-investments-net-assets-total-590-8-billion-at-third-quarter-fiscal-2024/" target="_blank">ended its third quarter of fiscal 2024</a> on December 31, 2023 with net assets of $590.8 billion compared to $576.1 billion at the end of the previous quarter: <br /></p><p></p><blockquote><p>The $14.6 billion increase in net assets for the quarter consisted of
$19.3 billion in net income less $4.7 billion in net Canada Pension
Plan (CPP) outflows. CPP Investments routinely receives more CPP
contributions than required to pay benefits during the first part of the
calendar year, partially offset by benefit payments exceeding
contributions in the final months of the year.</p>
<p>The Fund, which includes the combination of the base CPP and
additional CPP accounts, achieved a 10-year annualized net return of
9.3%. For the quarter, the Fund’s net return was 3.4%. In the 10-year
period up to and including the third quarter of fiscal 2024, CPP
Investments has contributed $319.4 billion in cumulative net income to
the Fund.</p>
<p><b>For the nine-month fiscal year-to-date period, the Fund increased by
$20.7 billion consisting of $15.3 billion in net income and $5.4 billion
in net CPP contributions. The Fund’s net return was 2.6% for that same
period.</b></p>
<p><b>“Strong performance of global equity and fixed income markets during
the final months of calendar 2023 contributed to the Fund’s continued
growth,” said John Graham, President & CEO. “We remain focused on
applying our investment capabilities to prudently manage the Fund to
deliver long-term value for CPP contributors and beneficiaries.”</b></p>
<p><b>Gains in public equity, fixed income, credit, private equity, energy
and infrastructure assets contributed positively to results, partially
offset by the impact of foreign exchange losses due to a stronger
Canadian dollar relative to the U.S. dollar.</b></p>
<p><b>Performance of the Base and Additional CPP Accounts</b></p>
<p>The base CPP account ended its third quarter of fiscal 2024 on
December 31, 2023, with net assets of $557.7 billion, compared to $546.3
billion at the end of the previous quarter. The $11.4 billion increase
in assets consisted of $17.8 billion in net income, less $6.4 billion in
net base CPP outflows. The base CPP account achieved a 3.3% net return
for the quarter, and a five-year annualized net return of 7.7%.</p>
<p>The additional CPP account ended its third quarter of fiscal 2024 on
December 31, 2023, with net assets of $33.1 billion, compared to $29.8
billion at the end of the previous quarter. The $3.3 billion increase in
assets consisted of $1.6 billion in net income and $1.7 billion in net
additional CPP contributions. The additional CPP account achieved a 5.0%
net return for the quarter, and a five-year annualized net return of
5.3%.</p>
<p>The additional CPP was designed with a different legislative funding
profile and contribution rate compared to the base CPP. Given the
differences in their design, the additional CPP has had a different
market risk target and investment profile since its inception in 2019.
As a result of these differences, we expect the performance of the
additional CPP to generally differ from that of the base CPP.</p>
<p>Furthermore, due to the differences in their net contribution
profiles, the assets in the additional CPP account are also expected to
grow at a much faster rate than those in the base CPP account.</p>
<p><img alt="Net Nominal Q3f24 En" class="size-full wp-image-56576" data-gtm-vis-first-on-screen7121193_579="79460" data-gtm-vis-first-on-screen7121193_674="79459" data-gtm-vis-first-on-screen7121193_676="79460" data-gtm-vis-first-on-screen7121193_677="79460" data-gtm-vis-first-on-screen7121193_678="79460" data-gtm-vis-has-fired7121193_579="1" data-gtm-vis-has-fired7121193_674="1" data-gtm-vis-has-fired7121193_676="1" data-gtm-vis-has-fired7121193_677="1" data-gtm-vis-has-fired7121193_678="1" data-gtm-vis-total-visible-time7121193_579="1500" data-gtm-vis-total-visible-time7121193_674="1500" data-gtm-vis-total-visible-time7121193_676="1500" data-gtm-vis-total-visible-time7121193_677="1500" data-gtm-vis-total-visible-time7121193_678="1500" height="179" src="https://www.cppinvestments.com/wp-content/uploads/2024/02/Net-Nominal-Q3F24-EN.jpg" width="751" /></p>
<p><b><br />
Long-Term Financial Sustainability</b></p>
<p>Every three years, the Office of the Chief Actuary of Canada (OCA),
an independent federal body that provides checks and balances on the
future costs of the CPP, evaluates the financial sustainability of the
CPP over a long period. In the most recent triennial review published in
December 2022, the Chief Actuary reaffirmed that, as at December 31,
2021, both the base and additional CPP continue to be sustainable over
the long term at the legislated contribution rates.</p>
<p>The Chief Actuary’s projections are based on the assumption that,
over the 75 years following 2021, the base CPP account will earn an
average annual rate of return of 3.69% above the rate of Canadian
consumer price inflation. The corresponding assumption is that the
additional CPP account will earn an average annual real rate of return
of 3.27%.</p>
<p><img alt="Net Real Returns Q3f24 En" class="size-full wp-image-56577" data-gtm-vis-first-on-screen7121193_579="81797" data-gtm-vis-first-on-screen7121193_674="81796" data-gtm-vis-first-on-screen7121193_676="81797" data-gtm-vis-first-on-screen7121193_677="81797" data-gtm-vis-first-on-screen7121193_678="81796" data-gtm-vis-has-fired7121193_579="1" data-gtm-vis-has-fired7121193_674="1" data-gtm-vis-has-fired7121193_676="1" data-gtm-vis-has-fired7121193_677="1" data-gtm-vis-has-fired7121193_678="1" data-gtm-vis-total-visible-time7121193_579="1500" data-gtm-vis-total-visible-time7121193_674="1500" data-gtm-vis-total-visible-time7121193_676="1500" data-gtm-vis-total-visible-time7121193_677="1500" data-gtm-vis-total-visible-time7121193_678="1500" height="198" src="https://www.cppinvestments.com/wp-content/uploads/2024/02/Net-Real-Returns-Q3F24-EN.jpg" width="753" /></p>
<p> </p>
<p>CPP Investments continues to build a portfolio designed to achieve a
maximum rate of return without undue risk of loss, while considering the
factors that may affect the funding of the CPP and its ability to pay
current benefits. The CPP is designed to serve today’s contributors and
beneficiaries while looking ahead to future decades and across multiple
generations. Accordingly, long-term results are a more appropriate
measure of CPP Investments’ performance and plan sustainability.</p>
<p><b>Operational Highlights</b></p>
<p><b>Corporate developments</b></p>
<ul><li>Ranked first among the world’s leading public pension funds by
Global SWF when measuring annualized returns between fiscal years 2013
and 2022 (Global SWF Data Platform, December 2023).</li></ul>
<ul><li>Completed a review of our business activities in Europe resulting in
the planned closure of our Luxembourg office in fiscal 2025. This
decision was a result of thorough analysis of business activities that
best serve our global operations. Established in January 2015, the
Luxembourg office has supported our investment activities in Europe.</li></ul>
<ul><li>Received the Australian-market <i>Kangaroo Issuer of the Year</i> award by Sydney-based <a aria-label="link tag 5" href="https://www.kanganews.com/news/18237-kanganews-awards-2023-institution-and-deal-winners-announced-2" rel="noopener" target="_blank">KangaNews</a>
for their annual institutions and transactions awards in 2023. The
KangaNews Awards consider factors such as the volume of issuance,
breadth of distribution, deal performance and commitment to the
Australian Dollar Bond market as an issuer. In 2023, CPP Investments
issued A$3.75 billion (C$3.4 billion) of bonds in the Australian market.</li></ul>
<p><b>Third-Quarter Investment Highlights</b></p>
<p><b>Credit Investments</b></p>
<ul><li>Participated in the financing of a subsidiary of Pattern Energy
Group, a U.S.-based renewable energy and transmission company, through a
US$83 million investment in a holding company debt facility, which will
support initial equity capital for the construction of SunZia
Transmission and SunZia Wind, a clean energy infrastructure project in
the U.S.</li></ul>
<ul><li>Agreed to invest up to €118 million in a forward-flow mezzanine loan
facility for Enpal. Based in Germany, the company offers financing
solutions for solar panels, electric vehicle chargers, heat pumps and
batteries as well as installation and maintenance services.</li></ul>
<ul><li>Entered into a newly formed venture with Blackstone Real Estate Debt
Strategies, Blackstone Real Estate Income Trust, Inc., and funds
affiliated with Rialto Capital and acquired a 20% equity stake for
US$1.2 billion in a venture that holds a US$16.8 billion senior
commercial mortgage loan portfolio, primarily located in the New York
metropolitan area.</li></ul>
<ul><li>Invested A$300 million (C$268 million) in a first-lien term loan to
TEG, a leading integrated live entertainment and ticketing service
provider in Australia.</li></ul>
<ul><li>Invested €75 million in a senior secured loan to Curtis Biomass
Plant, a 49-megawatt woody biomass plant using certified forestry waste
located in northwest Spain.</li></ul>
<ul><li>Invested in the financing package to support New Mountain Capital’s
investment in the merger of HealthComp, a U.S.-based benefits and
analytics platform, with Virgin Pulse, a global digital-first health,
wellbeing and navigation company.</li></ul>
<ul><li>Committed to invest C$197 million in financing to support CapVest
Partners in its acquisition of Recochem. Headquartered in Canada,
Recochem is a global manufacturer and distributor of aftermarket
transportation and household fluids.</li></ul>
<ul><li>Agreed to provide financing to support a consortium of investors led
by Sixth Street in its acquisition of the GreenSky platform and its
associated loan assets. GreenSky is a leader in point-of-sale home
improvement financing based in the U.S.</li></ul>
<ul><li>Committed up to US$90 million in junior financing to fund up to
US$820 million of loans originated by Service Finance Company, a U.S.
home improvement financial services company.</li></ul>
<p><b>Private Equity</b></p>
<ul><li>Invested €398 million to acquire interests in three funds managed by
Hayfin Capital Management. The transaction represents a diversified
portfolio of European mid-market, single- company secondary investments,
direct co-investments and funds.</li></ul>
<ul><li>Invested US$50 million in the carve-out of Forcepoint’s Global
Governments and Critical Infrastructure (G2CI) cybersecurity business,
alongside TPG. Based in the U.S., Forcepoint G2CI is a leading provider
of cybersecurity solutions.</li></ul>
<ul><li>Committed US$175 million to MBK Partners Fund VI, which focuses on
control buyouts investments in South Korea, Japan and Greater China.</li></ul>
<ul><li>Committed US$240 million to TPG Partners IX, L.P., which focuses
primarily on healthcare, software and digital media &
communications, and US$60 million to TPG Healthcare Partners II, L.P.,
which focuses solely on healthcare. The funds target upper middle-market
and large growth buyouts in North America and Western Europe.</li></ul>
<ul><li>Committed US$90 million to acquire ownership interests in a
diversified portfolio of 25 private equity funds with investments
distributed across Europe, North America and Australia.</li></ul>
<ul><li>Agreed to the partial realization of our investment in Visma, a
leading provider of mission-critical cloud software in Europe, retaining
an approximate 2% stake in the company. Net proceeds from the sale are
expected to be approximately C$700 million. Our original investment was
made in 2019.</li></ul>
<ul><li>Completed the sale of a diversified portfolio of 20 limited
partnership fund interests in mostly North American and European buyout
funds. Net proceeds from the sale were approximately C$2 billion. The
portfolio of fund interests represents various commitments made over the
course of approximately 20 years.</li></ul>
<p><b>Real Assets</b></p>
<ul><li>Completed a follow-on investment of US$905 million into Pattern
Energy Group to support the company’s ongoing development projects and
future growth opportunities. Pattern Energy is a leading U.S.-based
renewable energy and transmission company. We completed our initial
investment in 2020.</li></ul>
<ul><li>Committed an additional £300 million to Octopus Energy to support
the company’s continued global growth. Octopus Energy is a global clean
energy technology pioneer based in the U.K. Our partnership was
established in 2021.</li></ul>
<ul><li>Sold the Midland Gate Shopping Centre in Perth, Australia, held
through the Vicinity Retail Partnership (VRP). Gross proceeds from the
sale total A$97 million (C$85 million). The transaction marks the final
asset disposition from VRP, a joint venture vehicle established in 2010
to invest in shopping centres across Australia.</li></ul>
<ul><li>Sold our 24.5% stake in two operating German offshore wind projects,
Hohe See and Albatros, which have been fully operational for nearly
three years and produce a combined 2.5-million-megawatt hours of
electricity. Net proceeds from the sale were C$374 million. Our initial
investment was made in 2018 while the projects were still under
construction.</li></ul>
<p><b>Transaction Highlights Following the Quarter</b></p>
<ul><li>Signed a definitive agreement in support of the proposed merger
between Aera Energy, one of California’s major energy producers, and
California Resources Corporation, an independent energy and carbon
management company in the U.S. Through this transaction, we will receive
newly issued shares of common stock upon close of the transaction,
expected to represent approximately 11.2% of the combined company.</li></ul>
<ul><li>Completed a C$100M Freddie Mac-compliant preferred equity investment
in Panorama Tower, an 85-story, Class-A luxury multifamily high-rise
tower in Miami, Florida.</li></ul>
<ul><li>Committed to provide an additional US$75 million in financing to
Global Lending Services (GLS) through a term loan, bringing the total
size of the loan to US$150 million. Based in the U.S., GLS provides
automotive financing solutions offered through franchise and independent
automobile dealers.</li></ul>
<ul><li>Invested £40 million for an approximate 1% stake in Dechra
Pharmaceuticals alongside EQT. Dechra Pharmaceuticals is a U.K.-based
developer and manufacturer of specialty animal pharmaceuticals.</li></ul>
<ul><li>Participated in the financing of BridgeBio Pharma Inc., a U.S.-based
commercial-stage biopharmaceutical company focused on genetic diseases
and cancers, through a US$200 million synthetic royalty financing
commitment and a US$150 million term loan that refinances an existing
senior secured credit facility, alongside Blue Owl Capital. The
financing will support the commercial launch of acoramidis, a
pre-approval drug candidate designed to treat a rare and potentially
fatal heart condition known as transthyretin amyloid cardiomyopathy
(ATTR-CM).</li></ul>
<ul><li>Invested US$75 million in a secured credit facility issued by Altus
Power, a commercial-scale provider of clean electric power that
develops, owns and operates locally sited solar generation, energy
storage and charging infrastructure across the U.S.</li></ul></blockquote><p>I do not cover quarterly investments as it's a long-term Fund but can't say I was surprised.</p><p>As John Graham, President & CEO states: “Strong performance of global equity and fixed income markets during
the final months of calendar 2023 contributed to the Fund’s continued
growth. <b>We remain focused on
applying our investment capabilities to prudently manage the Fund to
deliver long-term value for CPP contributors and beneficiaries</b>.”</p><p>Some foreign currency losses due to the strong Canadian dollar last fiscal quarter which I expect to reverse once the Bank of Canada slashes rates.</p><p>More importantly, CPP Investments <a href="https://www.cppinvestments.com/newsroom/cpp-investments-ranks-among-worlds-best-with-10-year-returns/" target="_blank">ranks among</a> the best 10-year returns:</p><div class="vc_row wpb_row vc_row-fluid thegem-custom-65d53154ce7a89435" id="vc_row-65d53154ce7b2" style="margin-bottom: px; padding: px;"><div class="wpb_column vc_column_container vc_col-sm-12 thegem-custom-65d53154ce9308959"><div class="vc_column-inner thegem-custom-inner-65d53154ce932"><div class="wpb_wrapper thegem-custom-65d53154ce9308959">
<div class="wpb_text_column wpb_content_element thegem-vc-text thegem-custom-65d53154cea3c2419">
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<p><span data-contrast="auto"></span></p></div></div></div></div></div></div><blockquote><div class="vc_row wpb_row vc_row-fluid thegem-custom-65d53154ce7a89435" id="vc_row-65d53154ce7b2" style="margin-bottom: px; padding: px;"><div class="wpb_column vc_column_container vc_col-sm-12 thegem-custom-65d53154ce9308959"><div class="vc_column-inner thegem-custom-inner-65d53154ce932"><div class="wpb_wrapper thegem-custom-65d53154ce9308959"><div class="wpb_text_column wpb_content_element thegem-vc-text thegem-custom-65d53154cea3c2419"><div class="wpb_wrapper"><p><span data-contrast="auto">We are living in uncertain times, but there’s one thing Canadians can be certain about: the strong and steady performance of </span><a aria-label="link tag 3" href="https://www.cppinvestments.com/"><span data-contrast="auto">CPP Investments</span></a><span data-contrast="auto">.
The investment manager for Canada’s largest pension fund has been
recognized by industry experts for having among the highest returns over
the past decade when compared to global peers. </span><span data-ccp-props="{"201341983":0,"335559739":0,"335559740":240}"> </span></p>
<p><span data-contrast="auto">Global SWF, a New York-based pension industry specialist recently released its </span><a aria-label="link tag 4" href="https://globalswf.com/reports/2024annual" rel="noopener" target="_blank"><span data-contrast="auto">2024 Annual Report</span></a><span data-contrast="auto">,
which measured 10-year returns for sovereign wealth funds and public
pension funds. With a 10-year annualized rate of return of 10.9% from
fiscal 2013 to 2022, CPP Investments ranked first among national pension
funds, and second only to New Zealand Superannuation Fund and national
institutional investors. </span><span data-ccp-props="{"201341983":0,"335559739":0,"335559740":240}"> </span></p>
</div>
</div>
</div></div></div></div><div class="vc_row wpb_row vc_row-fluid thegem-custom-65d53154ceb956734" id="vc_row-65d53154ceb9c" style="margin-bottom: px; padding: px;"><div class="wpb_column vc_column_container vc_col-sm-12 thegem-custom-65d53154cecfb1955"><div class="vc_column-inner thegem-custom-inner-65d53154cecfc"><div class="wpb_wrapper thegem-custom-65d53154cecfb1955">
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<figure class="wpb_wrapper vc_figure" style="transition: all 2s ease 0s;">
<div class="vc_single_image-wrapper vc_box_border_grey"><img alt="Global SWF Chart" class="vc_single_image-img attachment-large" data-gtm-vis-first-on-screen7121193_579="1292" data-gtm-vis-first-on-screen7121193_674="1293" data-gtm-vis-first-on-screen7121193_676="1292" data-gtm-vis-first-on-screen7121193_677="1292" data-gtm-vis-first-on-screen7121193_678="1293" data-gtm-vis-has-fired7121193_579="1" data-gtm-vis-has-fired7121193_674="1" data-gtm-vis-has-fired7121193_676="1" data-gtm-vis-has-fired7121193_677="1" data-gtm-vis-has-fired7121193_678="1" data-gtm-vis-total-visible-time7121193_579="1500" data-gtm-vis-total-visible-time7121193_674="1500" data-gtm-vis-total-visible-time7121193_676="1500" data-gtm-vis-total-visible-time7121193_677="1500" data-gtm-vis-total-visible-time7121193_678="1500" height="640" src="https://www.cppinvestments.com/wp-content/uploads/2024/01/Global_SWF_Chart_0116_Flags-960x1024.jpg" style="transition: all 2s ease 0s;" title="Global Swf Chart 0116 Flags" width="600" /></div>
</figure>
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<div class="wpb_wrapper">
<p><span data-contrast="auto">The report highlights various fund
dynamics and industry trends, including how Canadian funds – such as CPP
Investments – are highly focused on investing in their home market of
North America. In addition, CPP Investments was lauded in the report for
participating in co-investments, an investment style well-known to
Canadian funds, as a way of gaining direct exposure. “CPP [Investments]
is by far the most active, but others are catching up rapidly.”</span><span data-ccp-props="{"201341983":0,"335559739":0,"335559740":240}"> </span></p>
<p><span data-contrast="auto">Learn more about how CPP Investments has been recognized among </span><a aria-label="link tag 5" href="https://www.cppinvestments.com/for-canadian/canadas-pension-fund-ranked-amongst-the-best-in-the-world/" rel="noopener" target="_blank"><span data-contrast="auto">leading global pension funds</span></a><span data-contrast="auto">. </span><span data-ccp-props="{"201341983":0,"335559739":0,"335559740":240}"> </span></p></div></blockquote><div class="wpb_wrapper"><p><span data-ccp-props="{"201341983":0,"335559739":0,"335559740":240}"></span></p>
</div><p></p><p>All this to say, relax, CPP Investments isn't selling top-notch real estate assets because it's in deep trouble, it's prudently managing liquidity risk to make sure it can capitalize on opportunities which will arise when the cycle turns south.</p><p>Below, CIO Ed Cass shares his thoughts on the investing landscape and portfolio construction in this on-camera interview.</p><p>
Next, Ed joined CNBC's Delivering Alpha 2023 conference last fall to discuss continued market demand amid higher interest rates, where the opportunities are for investment, and more. He explains why they are looking at commodities more actively. </p><p>
Third, DoubleLine CEO Jeffrey Gundlach, with CNBC's Scott Wapner and Bob Pisani live at Exchange ETF in Miami, warns of added volatility to the economic cycle and rising interest rates post-recession thanks to the fiscal response and U.S. government debt burden. Despite the recent CPI report affecting expectations for interest rate cuts, Gundlach doubts it will sway the Fed's decisions significantly. </p><p>He also highlights concerns about stock market valuations and tech company concentration risk, advocating for equal-weighted investments over passive market-weighted ones. Gundlach stresses the importance of international investing scrutiny and expresses optimism about India's economy. The conversation shifts to investment allocation, with a recommendation for a more conservative portfolio and an eye on purchasing assets at lower prices in the future. </p><p>
Lastly, please take the time to watch this TED talk with Dasha Navalnaya, daughter of Alexei Navalny who died in a Russian prison over the weekend <a href="https://news.sky.com/story/alexei-navalny-what-we-know-about-the-death-of-russias-opposition-leader-13072969" target="_blank">under dubious circumstances</a>. </p><p>Sharing the story of her father's poisoning, persecution and current imprisonment, she details what it was like growing up under the watchful eye of government surveillance as her father led a decade-long investigation into the corruption of Putin's regime — and shows why paying attention to what happens in Russia matters to everyone, everywhere (incredible young lady; h/t Mathieu St-Jean).<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/4wQ7hllTSO8?si=o5vU-ubFnfKyogyc" title="YouTube video player" width="640"></iframe></p><p>
<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/tznudCxT12o?si=Rkar50WQmenzwz3z" title="YouTube video player" width="640"></iframe></p><p>
<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/sjJ-4Rqa9A4?si=DcDypk3fOUTxFhjz" title="YouTube video player" width="640"></iframe></p><p>
<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/l4Lq7gaKW4A?si=-ZsKxXXgmBETRTKX" title="YouTube video player" width="640"></iframe> </p><p></p><p></p><p></p>Leo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.com0tag:blogger.com,1999:blog-5879608286191780679.post-44194189424905894862024-02-16T20:32:00.015-05:002024-02-20T10:12:18.683-05:00Top Funds' Activity in Q4 2023<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhI13KhSc1o4PuPeN8jn2RUxRFmlt1wP3hZmqVtNzWR2Qv0mmvh7pXQBMfDkE0tI3EspzIYhJaAVO3WM_aUK8Jo15HeqRedGfDFPAiheP_ybpw0fEOoIvT2y5-kqhSO1WAw_jtowQlMHSGbwv1jcmrKnthOAjNyMLnnZOWF8iKrLVbrapHtrDKFQWjRU-Jj/s320/Top%20fund%20managers.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="320" data-original-width="310" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhI13KhSc1o4PuPeN8jn2RUxRFmlt1wP3hZmqVtNzWR2Qv0mmvh7pXQBMfDkE0tI3EspzIYhJaAVO3WM_aUK8Jo15HeqRedGfDFPAiheP_ybpw0fEOoIvT2y5-kqhSO1WAw_jtowQlMHSGbwv1jcmrKnthOAjNyMLnnZOWF8iKrLVbrapHtrDKFQWjRU-Jj/w388-h400/Top%20fund%20managers.jpg" width="388" /></a></div>Lisa Kalai Han and Pia Singh of CNBC <a href="https://www.cnbc.com/2024/02/15/stock-market-today-live-updates.html" target="_blank">report</a> Dow slides more than 100 points Friday, major averages end 5-week winning run: <br /><p></p><p></p><blockquote><p>Stocks slid Friday after yet another hot inflation report stoked
fears that Federal Reserve rate cuts may not arrive until later than
anticipated this year.</p><p>The <span class="QuoteInBody-quoteNameContainer" data-test="QuoteInBody" id="LiveBlogArticle-QuoteInBody-1">S&P 500 </span>fell 0.48% to end at 5,005.57, and the <span class="QuoteInBody-quoteNameContainer" data-test="QuoteInBody" id="LiveBlogArticle-QuoteInBody-2">Dow Jones Industrial Average<span class="QuoteInBody-inlineButton"><span class="AddToWatchlistButton-watchlistContainer" data-analytics-id="-WatchlistDropdown" id="-WatchlistDropdown"></span></span></span> slid 145.13 points, or 0.37%, settling at 38,627.99. The <span class="QuoteInBody-quoteNameContainer" data-test="QuoteInBody" id="LiveBlogArticle-QuoteInBody-3">Nasdaq Composite </span>lost 0.82% to finish at 15,775.65. </p><p><b>All
three major indexes broke their five-week winning streaks to end the
week in the negative. The S&P 500 ended the week lower by 0.42%,
while the Dow slipped 0.11%. The Nasdaq tumbled 1.34%.</b></p><p>The producer price index for January, a measure of wholesale inflation, <a href="https://www.cnbc.com/2024/02/16/january-wholesale-prices-rise-0point3percent-more-than-expected.html">increased 0.3%</a>.
Economists polled by Dow Jones had anticipated a gain of 0.1%.
<b>Excluding food and energy, core PPI rose increased 0.5%, higher than the
expectations for a 0.1% advance.</b></p><p><b>The 10-year Treasury yield
spiked above 4.3% following the hot PPI reading. At one point, the
2-year Treasury yield topped 4.7%, the highest since December.</b></p><p>It’s
been a roller-coaster week for stocks, with investors carefully
assessing the direction of the U.S. economy and when the Federal Reserve
may decide to lower rates. On Tuesday, the <span class="QuoteInBody-quoteNameContainer" data-test="QuoteInBody" id="LiveBlogArticle-QuoteInBody-5">Dow </span>posted its biggest daily decline in nearly a year after <a href="https://www.cnbc.com/2024/02/13/stubborn-inflation-means-fed-will-cut-rates-less-than-market-thought.html">January’s headline consumer price index reading came in at 3.1%</a>, higher than the 2.9% economists polled by Dow Jones were expecting.</p><p>The market shook off the report the next two days, with the <span class="QuoteInBody-quoteNameContainer" data-test="QuoteInBody" id="LiveBlogArticle-QuoteInBody-7">S&P 500 </span>rebounding on Thursday to close at yet another record high. But
Friday’s wholesale inflation report added to concerns the Fed may have
to wait until later in the year before it starts cutting rates.</p><p><b>Greg
Bassuk, chief executive officer at AXS Investments, told CNBC that
investors should brace for more near-term volatility ahead. Until
recently, most investors were confident “that rate cuts would start in
the first half of the year, and it’s looking more likely that the Fed
will delay until the second half,” he said.</b></p><p><b>Bassuk added: “The
seesaw market is really reflective of this tug-of-war between high
sticky inflation — which suggests no near-term rate cuts — and strong
earnings and other signs of a robust economy, which underscores
investors belief that there’s more growth ahead for stocks.”</b></p><p><span class="QuoteInBody-quoteNameContainer" data-test="QuoteInBody" id="LiveBlogArticle-QuoteInBody-8">Applied Materials </span>popped 6% Friday on stronger-than-expected earnings. Shares of food delivery service <span class="QuoteInBody-quoteNameContainer" data-test="QuoteInBody" id="LiveBlogArticle-QuoteInBody-9">DoorDash<span class="QuoteInBody-inlineButton"><span class="AddToWatchlistButton-watchlistContainer" data-analytics-id="-WatchlistDropdown" id="-WatchlistDropdown"></span></span></span> dropped 8% on a wider-than-expected loss, while digital advertising company <span class="QuoteInBody-quoteNameContainer" data-test="QuoteInBody" id="LiveBlogArticle-QuoteInBody-10">Trade Desk<span class="QuoteInBody-inlineButton"><span class="AddToWatchlistButton-watchlistContainer" data-analytics-id="-WatchlistDropdown" id="-WatchlistDropdown"></span></span></span> popped about 17% after topping analysts’ fourth-quarter revenue estimates and offering an upbeat outlook for the first quarter.</p></blockquote><p>It's that time of the year again where we get a sneak peek into the portfolio's of the world's most famous money managers.</p><p>Before I get to it, it was a volatile week as inflation reports hit stocks and yields popped: <br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgcr4Uy0he0XrwAEFe5TVZ_bIC3zCD9prZmxBVs1UyVW7M9zs4RZXgEPRjg42VBdeO_r5nGTZ5z8ugHKpFGZ1AimVZdQpG4eNZlMSKtjhf6grFP2Yj46Fm65QAnutBqIXViJnmmT09Ozrt_PtvvLqQuPvmIIpWU8NeznIlMB9mPu50sPmGtJvHrGDKYJeGD/s944/TNX.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="552" data-original-width="944" height="374" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgcr4Uy0he0XrwAEFe5TVZ_bIC3zCD9prZmxBVs1UyVW7M9zs4RZXgEPRjg42VBdeO_r5nGTZ5z8ugHKpFGZ1AimVZdQpG4eNZlMSKtjhf6grFP2Yj46Fm65QAnutBqIXViJnmmT09Ozrt_PtvvLqQuPvmIIpWU8NeznIlMB9mPu50sPmGtJvHrGDKYJeGD/w640-h374/TNX.jpg" width="640" /></a></div>Still, I wouldn't read too much into the latest inflation reports except to say there's still some stickiness and it remains to be seen if this will persist.<p></p><p>But the Fed's inflation gauge is the PCE deflator and Fed Chair Jerome Powell explicitly stated they are not waiting for inflation to drop to 2% to start cutting rates.</p><p>Having said this, the stock market is incredibly concentrated in a few names and the risks of something bad hitting us are on the rise right now, which is why you should all take these 13F filings with a grain of salt here.</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">S&P 500 is the most concentrated it’s been in 50 years and is approaching an all-time high. This is fine right? <a href="https://t.co/17sGoSfLRn">pic.twitter.com/17sGoSfLRn</a></p>— Barchart (@Barchart) <a href="https://twitter.com/Barchart/status/1757941004802351124?ref_src=twsrc%5Etfw">February 15, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script> <p></p><p>Moreover, the risk of a recession is rising, which never augurs well for risk assets:</p><p>
</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">🟥WARNING🟥<br /><br />The yield curve is steepening rapidly.<br /><br />We should face a full-blown recession by the end of this year. <a href="https://t.co/DDEi4jcuFJ">pic.twitter.com/DDEi4jcuFJ</a></p>— HZ (@MFHoz) <a href="https://twitter.com/MFHoz/status/1758505260493296127?ref_src=twsrc%5Etfw">February 16, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script> <p>
</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">ALERT: Median home prices are now contracting at levels NEVER seen in 60 years<br /><br />This is truly a historic moment <a href="https://t.co/h5IveWfE5G">pic.twitter.com/h5IveWfE5G</a></p>— Game of Trades (@GameofTrades_) <a href="https://twitter.com/GameofTrades_/status/1758589567441961243?ref_src=twsrc%5Etfw">February 16, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script> <p>
</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">BEWARE: Trucking employment collapse has been a precursor to recessions since 1991 <a href="https://t.co/4zFU1K1H9Y">pic.twitter.com/4zFU1K1H9Y</a></p>— Game of Trades (@GameofTrades_) <a href="https://twitter.com/GameofTrades_/status/1758838712257978675?ref_src=twsrc%5Etfw">February 17, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script>
<p></p><p>And to make matters worse, some people state financial conditions are looser now than when the Fed started raising rates and Lawrence Summers thinks there's a 15% chance the Fed's next move is to raise,not cut rates:</p><p>
</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">Financial conditions today are easier than when the Fed started raising interest rates in March 2022.<br /><br />As seen in the chart below, financial conditions today are actually near their best since January 2022.<br /><br />The same picture can be seen in measures of financial conditions from… <a href="https://t.co/Xo6CtbUsdT">pic.twitter.com/Xo6CtbUsdT</a></p>— The Kobeissi Letter (@KobeissiLetter) <a href="https://twitter.com/KobeissiLetter/status/1758568833965580329?ref_src=twsrc%5Etfw">February 16, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script> <p>
</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">There’s a meaningful chance — maybe it’s 15% — that the next move is going to be upwards in rates, not downwards. The <a href="https://twitter.com/federalreserve?ref_src=twsrc%5Etfw">@federalreserve</a> is going to have to be very careful. <br /><br />Watch my interview w <a href="https://twitter.com/DavidWestin?ref_src=twsrc%5Etfw">@DavidWestin</a> tonight 6pm ET <a href="https://twitter.com/BloombergTV?ref_src=twsrc%5Etfw">@BloombergTV</a> Wall Street Week.<a href="https://t.co/QIPp9Rc68j">https://t.co/QIPp9Rc68j</a>…</p>— Lawrence H. Summers (@LHSummers) <a href="https://twitter.com/LHSummers/status/1758536019555533014?ref_src=twsrc%5Etfw">February 16, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script>
<p>Needless to say, if the Fed is forced to raise rates instead of cutting them, it's going to hit risk assets and the economy very hard.</p><p><b>All this to say the macro backdrop is poor and deteriorating fast and concentration risk is at extremes in the stock market, so take everything you read about what gurus bought and sold below with a shaker, not grain of salt.</b></p><p>Also keep in mind, the data is lagged by 45 days and doesn't include short positions or options.<br /></p><p><b>Top Funds' Activity in Q4 2023</b></p><p>Alright, let's get into it.</p><p>David Hollerith of Yahoo Finance <a href="https://finance.yahoo.com/news/amazon-alphabet-and-nvidia-attract-new-interest-from-wall-streets-biggest-investors-172800952.html" target="_blank">reports</a> Amazon, Alphabet, and Nvidia attract new interest from Wall Street's biggest investors:</p><p></p><blockquote><p>Some of Wall Street’s biggest investors made new bets on technology
giants in the fourth quarter, loading up on stakes in Amazon (<a class="link" data-i13n="cpos:1;pos:1" data-rapid_p="96" data-v9y="1" data-ylk="slk:AMZN;cpos:1;pos:1;elm:context_link;itc:0;sec:content-canvas" href="https://finance.yahoo.com/quote/AMZN?.tsrc=fin-srch&guccounter=1&guce_referrer=aHR0cHM6Ly9maW5hbmNlLnlhaG9vLmNvbS8&guce_referrer_sig=AQAAAM-dxPjEG72KOF0Thcx-HpX6hKswCyRuOCnq2JxcH1PqzHa6d0OjXuV5l6a_9QY2jnOWn3_ig1MJEJBkUe5pqsXQkQqMnmvqgrehQ3Do3CAG4rcn7YCqqhs-iQlL4AkvMRjVzlxbnyfglymBXg-4d54yoFXjVvcRWbP6reH1tDtK">AMZN</a>), Alphabet (<a class="link" data-i13n="cpos:2;pos:1" data-rapid_p="97" data-v9y="1" data-ylk="slk:GOOG;cpos:2;pos:1;elm:context_link;itc:0;sec:content-canvas" href="https://finance.yahoo.com/quote/GOOG?.tsrc=fin-srch">GOOG</a>, <a class="link" data-i13n="cpos:3;pos:1" data-rapid_p="98" data-v9y="1" data-ylk="slk:GOOGL;cpos:3;pos:1;elm:context_link;itc:0;sec:content-canvas" href="https://finance.yahoo.com/quote/GOOGL?.tsrc=fin-srch">GOOGL</a>), Alibaba (<a class="link" data-i13n="cpos:4;pos:1" data-rapid_p="99" data-v9y="1" data-ylk="slk:BABA;cpos:4;pos:1;elm:context_link;itc:0;sec:content-canvas" href="https://finance.yahoo.com/quote/BABA?.tsrc=fin-srch">BABA</a>), and Nvidia (<a class="link" data-i13n="cpos:5;pos:1" data-rapid_p="100" data-v9y="1" data-ylk="slk:NVDA;cpos:5;pos:1;elm:context_link;itc:0;sec:content-canvas" href="https://finance.yahoo.com/quote/NVDA?.tsrc=fin-srch">NVDA</a>).</p><p><b>Warren Buffett’s Berkshire Hathaway (<a class="link" data-i13n="cpos:6;pos:1" data-rapid_p="101" data-v9y="1" data-ylk="slk:BRK;cpos:6;pos:1;elm:context_link;itc:0;sec:content-canvas" href="https://finance.yahoo.com/quote/BRK-B?.tsrc=fin-srch">BRK</a>), however, did not. The conglomerate trimmed its holdings in Apple (<a class="link" data-i13n="cpos:7;pos:1" data-rapid_p="102" data-v9y="1" data-ylk="slk:AAPL;cpos:7;pos:1;elm:context_link;itc:0;sec:content-canvas" href="https://finance.yahoo.com/quote/AAPL?.tsrc=fin-srch">AAPL</a>) and HP (<a class="link" data-i13n="cpos:8;pos:1" data-rapid_p="103" data-v9y="1" data-ylk="slk:HPE;cpos:8;pos:1;elm:context_link;itc:0;sec:content-canvas" href="https://finance.yahoo.com/quote/HPE?.tsrc=fin-srch">HPE</a>) while adding to its stakes in oil giants Chevron (<a class="link" data-i13n="cpos:9;pos:1" data-rapid_p="104" data-v9y="1" data-ylk="slk:CVX;cpos:9;pos:1;elm:context_link;itc:0;sec:content-canvas" href="https://finance.yahoo.com/quote/CVX?.tsrc=fin-srch&guccounter=1&guce_referrer=aHR0cHM6Ly9maW5hbmNlLnlhaG9vLmNvbS8&guce_referrer_sig=AQAAAM-dxPjEG72KOF0Thcx-HpX6hKswCyRuOCnq2JxcH1PqzHa6d0OjXuV5l6a_9QY2jnOWn3_ig1MJEJBkUe5pqsXQkQqMnmvqgrehQ3Do3CAG4rcn7YCqqhs-iQlL4AkvMRjVzlxbnyfglymBXg-4d54yoFXjVvcRWbP6reH1tDtK">CVX</a>) and Occidental Petroleum (<a class="link" data-i13n="cpos:10;pos:1" data-rapid_p="105" data-v9y="1" data-ylk="slk:OXY;cpos:10;pos:1;elm:context_link;itc:0;sec:content-canvas" href="https://finance.yahoo.com/quote/OXY?.tsrc=fin-srch">OXY</a>). There was at least one additional investment Berkshire kept confidential for now.</b></p><p>The details about these new bets made in the fourth quarter emerged
this week in a series of filings to the Securities and Exchange
Commission. Large institutional investors are required to make these
disclosures on a quarterly basis, showing what they bought and sold.</p><p><b>What the latest batch showed is that many piled into tech names at the end of 2023.</b></p><p><b>A
hedge fund run by Michael Burry — who famously shorted subprime
mortgages during the 2008 financial crisis and became a central figure
in Michael Lewis’s 2010 book "The Big Short" — added 35,000 shares of
Alphabet and 30,000 shares of Amazon. That fund, Scion Capital, also
boosted bets on Chinese e-commerce giants Alibaba and JD.com.</b></p><p><b>Many hedge funds also gravitated to the stock of Nvidia, the dominant artificial intelligence chipmaker.</b></p><p><b>Bridgewater
Associates, the world’s biggest hedge fund firm, increased its stake in
Nvidia by 458% as it added more than 220,000 shares.</b></p><p><b>It also
increased its position in Alphabet by more than 465,000 shares, making
it the fund’s 12th-largest position as of the end of December, and added
a small stake in Apple.</b></p><p><b>Another hedge fund, AQR, increased its
stake in Nvidia by 22%. But it trimmed its holdings in Apple and
Microsoft, its two largest positions, by 5% and 4%, respectively</b>.</p><p>Berkshire sold just 1% of its holdings in Apple, or 10 million
shares, leaving it with a huge stake of more than 950 million shares.</p><p>Apple
has had a rough start to 2024 as it juggled downgrades to its stock
price, major changes to its App Store policies, and a potential
antitrust lawsuit that could target large swaths of its business. These
challenges mounted as it launched the ambitious <a class="link" data-i13n="cpos:11;pos:1" data-rapid_p="106" data-v9y="1" data-ylk="slk:Vision Pro headset;cpos:11;pos:1;elm:context_link;itc:0;sec:content-canvas" href="https://www.apple.com/apple-vision-pro/" rel="nofollow noopener" target="_blank">Vision Pro headset</a>.</p><p><b>One other notable investor pared back its exposure to Apple in the fourth quarter: the Soros Fund.</b></p><p><b>The
outfit started by billionaire investor George Soros and now run by his
son closed out a short position and zeroed out of its underlying
holdings in the tech giant.</b></p><p>Some of these same investors made some
notable bets on the banking industry, especially a regional lender that
is currently under a lot of scrutiny: <a class="link yahoo-link" data-i13n="cpos:12;pos:1" data-rapid_p="108" data-v9y="1" data-ylk="slk:New York Community Bank;cpos:12;pos:1;elm:context_link;itc:0;sec:content-canvas;outcm:mb_qualified_link;_E:mb_qualified_link;ct:story;" href="https://finance.yahoo.com/news/nycb-clarifies-that-alessandro-dinello-is-the-new-boss-of-the-embattled-bank-121145939.html">New York Community Bank</a> (<a class="link" data-i13n="cpos:13;pos:1" data-rapid_p="109" data-v9y="1" data-ylk="slk:NYCB;cpos:13;pos:1;elm:context_link;itc:0;sec:content-canvas" href="https://finance.yahoo.com/quote/NYCB?.tsrc=fin-srch">NYCB</a>).</p><p>The Soros Fund, AQR, and Millennium Management all increased their
exposure to NYCB, which surprised Wall Street on Jan. 31 by slashing its
dividend and reporting a net quarterly loss of $252 million.</p><p>It is not known what these funds did with their stakes between the end of the fourth quarter and now. <br /></p></blockquote><p>My immediate thoughts after reading this is why the hell are big hedge funds buying the parabolic move in Nvidia: <br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi9s5kL2yA9-dXl3olACVV2OBI5QuNnYwt2VADuqPB8a9o4VvYB-zfDpf2kn9ngJvjI3l1ZvThJzmtimGDNgSPtE9AXga5Iwr5Sq8g2ypTFu5nj4FeIgUCD39g-PxqV0n4uCgAPtqsAU2W-uaYZCIwRkut4uATdD-Q2aSwfIeWY_H2tDOpPX_X8r3Xn4fgZ/s951/NVDA.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="626" data-original-width="951" height="422" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi9s5kL2yA9-dXl3olACVV2OBI5QuNnYwt2VADuqPB8a9o4VvYB-zfDpf2kn9ngJvjI3l1ZvThJzmtimGDNgSPtE9AXga5Iwr5Sq8g2ypTFu5nj4FeIgUCD39g-PxqV0n4uCgAPtqsAU2W-uaYZCIwRkut4uATdD-Q2aSwfIeWY_H2tDOpPX_X8r3Xn4fgZ/w640-h422/NVDA.jpg" width="640" /></a></div><p></p><p>I know why, these are momentum strategies which go long large cap megacap tech stocks as long as price is above the one-month moving average (they make it sound sophisticated but trust me, it isn't).</p><p>Nvidia reports next week and if you believe Loop Capital's price target, it still has 65% upside from these insanely lofty levels:</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">Nvidia <a href="https://twitter.com/search?q=%24NVDA&src=ctag&ref_src=twsrc%5Etfw">$NVDA</a> will hit $1,200 says Loop Capital <a href="https://t.co/ppjzFWFsDZ">pic.twitter.com/ppjzFWFsDZ</a></p>— Barchart (@Barchart) <a href="https://twitter.com/Barchart/status/1758610735255720418?ref_src=twsrc%5Etfw">February 16, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script> <p></p><p>Of course, god forbid the company disappoints investors because it will suffer the same fate as Roku Inc today or far worse given it's priced for perfection:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjd9C7d5el8JPcMDL6EyPx7EO9mtCn5XhfD95Fzmrgfjuox6b6OwmeR6k6bUPaX3tjR9mJHQgrXzT0m3ym3mrp2Knm_aywnmmOxsEXhVBFybhxbF1eVQEAYMTNJEybEa5tzYcPvlPCfGnHm-a1w5zRIoRMMR7VRj6tYolyEVORbqOgHLVXSJI4zMDr7ELlC/s941/ROKU.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="602" data-original-width="941" height="410" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjd9C7d5el8JPcMDL6EyPx7EO9mtCn5XhfD95Fzmrgfjuox6b6OwmeR6k6bUPaX3tjR9mJHQgrXzT0m3ym3mrp2Knm_aywnmmOxsEXhVBFybhxbF1eVQEAYMTNJEybEa5tzYcPvlPCfGnHm-a1w5zRIoRMMR7VRj6tYolyEVORbqOgHLVXSJI4zMDr7ELlC/w640-h410/ROKU.jpg" width="640" /></a></div><p>And it wasn't just Roku.Earlier this week, shares of Twilio Inc, another high-flyer from the past, got clobbered after delivering less than stellar results:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg0b1hT8awJ-XbwAHfiEf-FKtLRNAvRdLvQ5hyphenhyphenFIAtVcPhAu5j9yM7Rt3QnVOnAF5ixZD2bbBjCc6m9tKY6C-EWk2j1EKScgB88EeKfbdzxfHtx4oXkOY3HY-GSKdPWeKwR8XLxPM07FO-MueXkxE6-JueVSYz6c26IaCQp0utcO0XeArItkg1tnzQf4OXI/s946/TWLO.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="609" data-original-width="946" height="412" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg0b1hT8awJ-XbwAHfiEf-FKtLRNAvRdLvQ5hyphenhyphenFIAtVcPhAu5j9yM7Rt3QnVOnAF5ixZD2bbBjCc6m9tKY6C-EWk2j1EKScgB88EeKfbdzxfHtx4oXkOY3HY-GSKdPWeKwR8XLxPM07FO-MueXkxE6-JueVSYz6c26IaCQp0utcO0XeArItkg1tnzQf4OXI/w640-h412/TWLO.jpg" width="640" /></a></div><p></p><p>Will Nvidia disappoint investors next week and bring about a major selloff in tech?</p><p>Maybe but this company has ripped the face off short sellers so I wouldn't bet on it.</p><p>All I know is it can easily fall below it 50-day moving average in a blink of an eye IF it disappoints:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgdbCKHnvnPnepTbmrTZhEK03s5cSJy_p-BeCa59em2dDzpOvQWdLurkMTKmTWIz2DJ2zUBc1E4RF2LE__4gXQXa2hb34_FhqP1mPRcx7wBXv2_rYCCWg2I2iKPlPfOfpqWcB6pRZfFZtsX9YuGEZA5vbzcKDGdDqWBpLWxdtZL1O7CjjHdOF7v0rg4jJ1u/s700/NVDA.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="530" data-original-width="700" height="484" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgdbCKHnvnPnepTbmrTZhEK03s5cSJy_p-BeCa59em2dDzpOvQWdLurkMTKmTWIz2DJ2zUBc1E4RF2LE__4gXQXa2hb34_FhqP1mPRcx7wBXv2_rYCCWg2I2iKPlPfOfpqWcB6pRZfFZtsX9YuGEZA5vbzcKDGdDqWBpLWxdtZL1O7CjjHdOF7v0rg4jJ1u/w640-h484/NVDA.png" width="640" /></a></div><p></p><p>Alright, let's look at what other stocks top hedge funds bought last quarter, courtesy of Bill Arpert of Barron's who <a href="https://www.barrons.com/articles/hedge-fund-holdings-b1514c43" target="_blank">took an inside peek</a>: <br /></p><p class="css-k3zb6l-Paragraph e1e4oisd0" data-type="paragraph"></p><blockquote><p class="css-k3zb6l-Paragraph e1e4oisd0" data-type="paragraph">If you
are a serious investor, your sweetheart was likely mad at you on
Valentine’s Day. That’s because you were studying the 14,000 different
investment positions that hedge fund giant Citadel Advisors had at
year-end.</p><p class="css-k3zb6l-Paragraph e1e4oisd0" data-type="paragraph">Every
Feb. 14, big money managers are required to file 13F forms with the
U.S. Securities and Exchange Commission, revealing many of their Dec. 31
holdings. <b>Among the notable new buys at the largest hedge funds were
names like <span class="css-ndwbas" data-id="components_CompanyLink_CompanyLinkWrapper"><a class="ekxajjj0 css-urs5l7-OverridedLink" data-id="components_sharedStyles_StyledOverrideLink" data-type="phrase" href="https://www.barrons.com/market-data/stocks/dis?mod=article_chiclet" rel="" target="_blank">Walt Disney</a></span>, Micron Technology, and Oracle.</b></p><p class="css-k3zb6l-Paragraph e1e4oisd0" data-type="paragraph">The field’s best investment results in recent years have been those of <span class="css-1d4fvfp" data-id="components_Link_WrapperLink"><span class="css-1exbff7-Wrapper eicu33j1"><a class="css-2ipnrv" data-id="components_Hyperlink_OverridedLink" data-type="link" href="https://www.barrons.com/articles/multistrategy-hedge-funds-podshops-annual-returns-634dd7a4?mod=article_inline" rel="" target="_self">“multistrategy” hedge funds</a></span></span>
like Ken Griffin’s Citadel and Izzy Englander’s Millennium Management.
Their consistent, strong returns might make poring over their13Fs seem
like a tempting way to ride their coattails without paying their steep
management fees.</p><p class="css-k3zb6l-Paragraph e1e4oisd0" data-type="paragraph"><b>Beware.
The high-turnover, complex strategies of the multi-strat shops make
their 13Fs the hardest to interpret on all of Wall Street.</b></p><p>
With some $60 billion managed by dozens of teams, Citadel’s December-quarter 13F discloses positions worth hundreds of billions of dollars in the aggregate, thanks to leverage. To analyze Citadel’s changes, and those of other multistrats, we went to the website 13F.info operated by the data scientist Todd Schneider.</p><p>
Over 680 of Citadel’s year-end positions exceeded $100 million apiece. Many of the largest were market bets made with exchange-traded funds like the SPDR S&P 500, which multistrats use to keep their overall portfolio from rising or falling with the market’s tide.</p><p>
<b>Citadel’s largest reported bets on common stocks were, unsurprisingly, the large-cap stocks Nvidia, Microsoft, and Amazon.com. From September to December, the fund’s 13Fs show a tripling of its Amazon shareholdings, a roughly 75% boost in Nvidia, and about a 15% reduction in Microsoft. But the fund’s bets on stocks aren’t confined to common shares. </b></p><p><b>Along with its shareholdings, Citadel had put and call option bets on
those three names, and many others in its portfolio</b>. The reported value
of Citadel’s bearish and bullish options on those three big names
actually exceeded its stock positions. The option reporting in a 13F is
almost uninterpretable, noted the financial-data expert Byrne Hobart <span class="css-1d4fvfp" data-id="components_Link_WrapperLink"><span class="css-1exbff7-Wrapper eicu33j1"><a class="css-wg45lz" data-id="components_Hyperlink_OverridedLink" data-type="link" href="https://capitalgains.thediff.co/p/13f" rel="" target="_blank">in his blog</a> </span></span>last year, because the entries only show the total value controlled by the options—not their dates or strike prices.</p><p class="css-k3zb6l-Paragraph e1e4oisd0" data-type="paragraph"><b>And
13Fs include no information at all on short sales or swap trades. That
mean that the real size and direction of a hedge fund’s bet on a stock
can be the opposite of what its 13F might suggest, Hobart explained.</b></p><p class="css-k3zb6l-Paragraph e1e4oisd0" data-type="paragraph">More
informative moves in a multistrat’s 13F might be the really, really big
share purchases. Among Citadel’s $100 million bets, about 30 increased
by 1,000% or more between the September and December filings, including
common holdings of <span class="css-ndwbas" data-id="components_CompanyLink_CompanyLinkWrapper"><a class="ekxajjj0 css-urs5l7-OverridedLink" data-id="components_sharedStyles_StyledOverrideLink" data-type="phrase" href="https://www.barrons.com/market-data/stocks/c?mod=article_chiclet" rel="" target="_blank">Citigroup</a></span>, <span class="css-ndwbas" data-id="components_CompanyLink_CompanyLinkWrapper"><a class="ekxajjj0 css-urs5l7-OverridedLink" data-id="components_sharedStyles_StyledOverrideLink" data-type="phrase" href="https://www.barrons.com/market-data/stocks/cat?mod=article_chiclet" rel="" target="_blank">Caterpillar</a></span>, and <span class="css-ndwbas" data-id="components_CompanyLink_CompanyLinkWrapper"><a class="ekxajjj0 css-urs5l7-OverridedLink" data-id="components_sharedStyles_StyledOverrideLink" data-type="phrase" href="https://www.barrons.com/market-data/stocks/v?mod=article_chiclet" rel="" target="_blank">Visa</a></span>.
Again, there were options bets on all three whose notional value
exceeded the size of the common stock positions—but the overall
direction on three names all appeared to be bullish. At least they were
on Dec. 31.</p><p class="css-k3zb6l-Paragraph e1e4oisd0" data-type="paragraph">Among
its big positions, there were smaller-cap stocks in which Citadel’s
December quarter increases were even more dramatic. Its shareholdings in
chip-designer software supplier <span class="css-ndwbas" data-id="components_CompanyLink_CompanyLinkWrapper"><a class="ekxajjj0 css-urs5l7-OverridedLink" data-id="components_sharedStyles_StyledOverrideLink" data-type="phrase" href="https://www.barrons.com/market-data/stocks/snps?mod=article_chiclet" rel="" target="_blank">Synopsys</a></span>, security software vendor <span class="css-ndwbas" data-id="components_CompanyLink_CompanyLinkWrapper"><a class="ekxajjj0 css-urs5l7-OverridedLink" data-id="components_sharedStyles_StyledOverrideLink" data-type="phrase" href="https://www.barrons.com/market-data/stocks/dt?mod=article_chiclet" rel="" target="_blank">Dynatrace</a></span>, and the genetic testing firm <span class="css-ndwbas" data-id="components_CompanyLink_CompanyLinkWrapper"><a class="ekxajjj0 css-urs5l7-OverridedLink" data-id="components_sharedStyles_StyledOverrideLink" data-type="phrase" href="https://www.barrons.com/market-data/stocks/ntra?mod=article_chiclet" rel="" target="_blank">Natera</a></span> each jumped by more than 50,000% from the end of September. <br /></p><p class="css-k3zb6l-Paragraph e1e4oisd0" data-type="paragraph"><b>Millennium
is the other multistrat firm whose assets under management exceed $60
billion. Its December 13F showed about 400 positions over $100 million
each.</b></p><p class="css-k3zb6l-Paragraph e1e4oisd0" data-type="paragraph">A
dozen of those big Millennium’s shareholdings jumped by more than
1,000% in the quarter. The largest-cap names in that bunch were health
insurer <span class="css-ndwbas" data-id="components_CompanyLink_CompanyLinkWrapper"><a class="ekxajjj0 css-urs5l7-OverridedLink" data-id="components_sharedStyles_StyledOverrideLink" data-type="phrase" href="https://www.barrons.com/market-data/stocks/ci?mod=article_chiclet" rel="" target="_blank">Cigna Group</a></span>, the retailer <span class="css-ndwbas" data-id="components_CompanyLink_CompanyLinkWrapper"><a class="ekxajjj0 css-urs5l7-OverridedLink" data-id="components_sharedStyles_StyledOverrideLink" data-type="phrase" href="https://www.barrons.com/market-data/stocks/tjx?mod=article_chiclet" rel="" target="_blank">TJX Cos</a></span>., industrial gas supplier <span class="css-ndwbas" data-id="components_CompanyLink_CompanyLinkWrapper"><a class="ekxajjj0 css-urs5l7-OverridedLink" data-id="components_sharedStyles_StyledOverrideLink" data-type="phrase" href="https://www.barrons.com/market-data/stocks/lin?mod=article_chiclet" rel="" target="_blank">Linde</a></span>, and casualty insurer <span class="css-ndwbas" data-id="components_CompanyLink_CompanyLinkWrapper"><a class="ekxajjj0 css-urs5l7-OverridedLink" data-id="components_sharedStyles_StyledOverrideLink" data-type="phrase" href="https://www.barrons.com/market-data/stocks/pgr?mod=article_chiclet" rel="" target="_blank">Progressive</a></span>.
<b>Shareholdings in Progressive jumped almost 48,000%, with only a very
modest offsetting options hedge. </b>The big purchases of Cigna, Linde, and
TJX shares were also offset by relatively small opposing options bets.</p><p class="css-k3zb6l-Paragraph e1e4oisd0" data-type="paragraph">The very biggest jumps in shareholdings at Millennium included smaller names like the British heating and plumbing supplier <span class="css-ndwbas" data-id="components_CompanyLink_CompanyLinkWrapper"><a class="ekxajjj0 css-urs5l7-OverridedLink" data-id="components_sharedStyles_StyledOverrideLink" data-type="phrase" href="https://www.barrons.com/market-data/stocks/ferg?countrycode=uk&mod=article_chiclet" rel="" target="_blank">Ferguson</a></span>, the regional bank <span class="css-ndwbas" data-id="components_CompanyLink_CompanyLinkWrapper"><a class="ekxajjj0 css-urs5l7-OverridedLink" data-id="components_sharedStyles_StyledOverrideLink" data-type="phrase" href="https://www.barrons.com/market-data/stocks/wbs?mod=article_chiclet" rel="" target="_blank">Webster Financial</a></span>, <span class="css-ndwbas" data-id="components_CompanyLink_CompanyLinkWrapper"><a class="ekxajjj0 css-urs5l7-OverridedLink" data-id="components_sharedStyles_StyledOverrideLink" data-type="phrase" href="https://www.barrons.com/market-data/stocks/ebay?mod=article_chiclet" rel="" target="_blank">eBay</a></span>, and the data-analysis software supplier <span class="css-ndwbas" data-id="components_CompanyLink_CompanyLinkWrapper"><a class="ekxajjj0 css-urs5l7-OverridedLink" data-id="components_sharedStyles_StyledOverrideLink" data-type="phrase" href="https://www.barrons.com/market-data/stocks/pltr?mod=article_chiclet" rel="" target="_blank">Palantir Technologies</a></span>.</p><p class="css-k3zb6l-Paragraph e1e4oisd0" data-type="paragraph">D.E.
Shaw is the big quant shop that’s quietly put up one of the best
long-term records. Among its $100 million-plus positions, the December
13F reveals a 3,500% jump in Shaw’s holdings of chip maker <span class="css-ndwbas" data-id="components_CompanyLink_CompanyLinkWrapper"><a class="ekxajjj0 css-urs5l7-OverridedLink" data-id="components_sharedStyles_StyledOverrideLink" data-type="phrase" href="https://www.barrons.com/market-data/stocks/mu?mod=article_chiclet" rel="" target="_blank">Micron Technology</a></span>, with a relatively small offsetting option hedge. Holdings in <span class="css-ndwbas" data-id="components_CompanyLink_CompanyLinkWrapper"><a class="ekxajjj0 css-urs5l7-OverridedLink" data-id="components_sharedStyles_StyledOverrideLink" data-type="phrase" href="https://www.barrons.com/market-data/stocks/nflx?mod=article_chiclet" rel="" target="_blank">Netflix</a></span> stock rose some 670%, also with only a smallish negative options hedge. The fund’s shareholdings of <span class="css-ndwbas" data-id="components_CompanyLink_CompanyLinkWrapper"><a class="ekxajjj0 css-urs5l7-OverridedLink" data-id="components_sharedStyles_StyledOverrideLink" data-type="phrase" href="https://www.barrons.com/market-data/stocks/cmg?mod=article_chiclet" rel="" target="_blank">Chipotle Mexican Grill</a></span> grew nearly 1,000% in the quarter, but were accompanied by sizable opposing options positions.</p><p class="css-k3zb6l-Paragraph e1e4oisd0" data-type="paragraph">Somewhat
smaller multistrategy managers that nevertheless have wide followings
are Steve Cohen’s Point72 Asset Management and Nicholas Maounis’
Verition Fund Management. Their 13Fs seem to point in clearer directions
than those of larger firms.</p><p>
Point72 reported about 90 positions exceeding $100 million in its December filing. New and largely unhedged bets appeared on the energy giants Shell and Exxon Mobil. New software bets included Oracle and HubSpot. Other new or greatly increased positions included Clorox, defense firm General Dynamics, chemical giant 3M, home builder Lennar, biotech firms Immunovant and Repligen, and United Airlines Holdings. <br /></p><p class="css-k3zb6l-Paragraph e1e4oisd0" data-type="paragraph">The
hedge fund Verition is smaller still, but showed about 20 positions
above $50 million each in its December 13F. Those with more than a
1,000% increase in shareholdings, and seemingly modest options hedges,
included Disney, the utility <span class="css-ndwbas" data-id="components_CompanyLink_CompanyLinkWrapper"><a class="ekxajjj0 css-urs5l7-OverridedLink" data-id="components_sharedStyles_StyledOverrideLink" data-type="phrase" href="https://www.barrons.com/market-data/stocks/nee?mod=article_chiclet" rel="" target="_blank">NextEra Energy</a></span>, Google parent <span class="css-ndwbas" data-id="components_CompanyLink_CompanyLinkWrapper"><a class="ekxajjj0 css-urs5l7-OverridedLink" data-id="components_sharedStyles_StyledOverrideLink" data-type="phrase" href="https://www.barrons.com/market-data/stocks/googl?mod=article_chiclet" rel="" target="_blank">Alphabet</a></span>, the videogame publisher <span class="css-ndwbas" data-id="components_CompanyLink_CompanyLinkWrapper"><a class="ekxajjj0 css-urs5l7-OverridedLink" data-id="components_sharedStyles_StyledOverrideLink" data-type="phrase" href="https://www.barrons.com/market-data/stocks/ea?mod=article_chiclet" rel="" target="_blank">Electronic Arts</a></span>, and the weight-loss drug leader <span class="css-ndwbas" data-id="components_CompanyLink_CompanyLinkWrapper"><a class="ekxajjj0 css-urs5l7-OverridedLink" data-id="components_sharedStyles_StyledOverrideLink" data-type="phrase" href="https://www.barrons.com/market-data/stocks/lly?mod=article_chiclet" rel="" target="_blank">Eli Lilly</a></span>.</p><p class="css-k3zb6l-Paragraph e1e4oisd0" data-type="paragraph"><b>It’s
important to remember that the multistrat firms avoid big drawdowns by
being fleet on their feet—so the 45-day old snapshot in their 13Fs may
be dated before it appears.</b></p><p class="css-k3zb6l-Paragraph e1e4oisd0" data-type="paragraph">These
filings are no shortcut to market-beating performance, or “alpha,” the
data maven Hobart warns, because the better-known a money manager is,
the more people are studying its 13Fs.</p><p class="css-k3zb6l-Paragraph e1e4oisd0" data-type="paragraph">The information found in a 13F should only be the starting point of any investor’s research.</p></blockquote><p></p><p>Yeah, multistrategy funds are churning their portfolio or doing other trades you don't see to hedge them, so it's difficult to read too much into their trading.</p><p>Below, I provide a detailed list of top hedge funds, you click on the link, see their top holdings, then click on column (change %) twice to see where they increased their holdings the most.</p><p>For example, below look at the top holdings of <a href="https://www.nasdaq.com/market-activity/institutional-portfolio/viking-global-investors-lp-72854" target="_blank">Viking Global</a>, a top L/S fund (<b>note that Nvidia doesn't figure among the fund's top 20 holdings, they played Advanced Micro Devices instead, another high-flyer</b>):<br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiXA8lG7-L-Bz8nTvmOZcUGJkpKWd9uVORUAg_UKH8PvrGpGfbzU2x11Ij53EXSsdIgscP4zMFXB4hmC3qArhjAOqLIeTIruODp_nMEcjUbxdbvlDSXUzsnlhACzQH08YJ85OQsHgQZaSJUJEmW1BRbxBujg5_4ElGpnq9w9YR5YTzlXajfIPqMNfzc6nSh/s1067/Viking1.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="731" data-original-width="1067" height="438" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiXA8lG7-L-Bz8nTvmOZcUGJkpKWd9uVORUAg_UKH8PvrGpGfbzU2x11Ij53EXSsdIgscP4zMFXB4hmC3qArhjAOqLIeTIruODp_nMEcjUbxdbvlDSXUzsnlhACzQH08YJ85OQsHgQZaSJUJEmW1BRbxBujg5_4ElGpnq9w9YR5YTzlXajfIPqMNfzc6nSh/w640-h438/Viking1.jpg" width="640" /></a></div><p>Then click on the column with heading change% which I circled below (click twice to get largest percentage change in positions):</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhm2J1ACmRS0NN33_bDlR5Yo2cBIFt89BEbnv_GKcdOpMOXyTv-tV1I0qzVTXTk7fbGuIdZ4mXOcPeYaXOzd7KjAb7Z5KHBZM7b6rX2fsRM9r6jbKrl0-PEtWBx_gSzAa1HSNndN2l1zw42fNUWaEHuimUUP7pgsMulVSvD_JaVn5R8Z-B8LhDpUuy3Qrpz/s1065/Viking2.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="795" data-original-width="1065" height="478" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhm2J1ACmRS0NN33_bDlR5Yo2cBIFt89BEbnv_GKcdOpMOXyTv-tV1I0qzVTXTk7fbGuIdZ4mXOcPeYaXOzd7KjAb7Z5KHBZM7b6rX2fsRM9r6jbKrl0-PEtWBx_gSzAa1HSNndN2l1zw42fNUWaEHuimUUP7pgsMulVSvD_JaVn5R8Z-B8LhDpUuy3Qrpz/w640-h478/Viking2.jpg" width="640" /></a></div><p>You will see Viking Global increased its stake in the insurer The Progressive Coporation (PGR) by 400% in Q4 and that stock has continued to run up nicely in Q1:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEghP70mSodQ5dX58JgX9nfvzWtjSwTwxRscM3Cq4zmn1GyFvKwq7KTbFBfJTDFf8H8IKHoxw87ojJi5jPzKP2jynMAiuQf19Th2obIMCnG359xvKOv2kx8L4oVL1UYtEKAL5pqOxp3TmMcBrmRImC8UoQe96ZgpM7G1TLa6B8qNTyLrPy33iu_eQRvmLeCi/s962/PGR.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="613" data-original-width="962" height="408" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEghP70mSodQ5dX58JgX9nfvzWtjSwTwxRscM3Cq4zmn1GyFvKwq7KTbFBfJTDFf8H8IKHoxw87ojJi5jPzKP2jynMAiuQf19Th2obIMCnG359xvKOv2kx8L4oVL1UYtEKAL5pqOxp3TmMcBrmRImC8UoQe96ZgpM7G1TLa6B8qNTyLrPy33iu_eQRvmLeCi/w640-h408/PGR.jpg" width="640" /></a></div><p>Would I buy it here? Probably not but these are the type of breakouts smart traders buy.</p><p>Now, at the bottom of Viking Global's largest percentage increase table above, you will see shares of a biotech company Viking Therapeutics:</p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjmvJL3h2u8W1ZzlHvnGga7QnIxpYdrCdqvWxb_5bXfKmKGw0svETOsIswDcjIsp7SGac6D8igEUKSLJ6dMDyJ-MBeXAeq2-BT7KbgY5DDTIxrTwxcPq_mzKaZl1oLiPpg6U92ULMm4Hai2ja9dX52zfS2NSmB2iLK6DdwYWKVkQH7pM5tT_XoJhY6ddOXd/s944/VKTX.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="605" data-original-width="944" height="410" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjmvJL3h2u8W1ZzlHvnGga7QnIxpYdrCdqvWxb_5bXfKmKGw0svETOsIswDcjIsp7SGac6D8igEUKSLJ6dMDyJ-MBeXAeq2-BT7KbgY5DDTIxrTwxcPq_mzKaZl1oLiPpg6U92ULMm4Hai2ja9dX52zfS2NSmB2iLK6DdwYWKVkQH7pM5tT_XoJhY6ddOXd/w640-h410/VKTX.jpg" width="640" /></a></div><p></p><p>These shares have performed extraordinarily well since Q4, almost quadrupling in price.</p><p><b>Biotech is a space I track very closely. This is where I see the greatest risks and opportunities.<br /></b></p><p>For example, I can tell you all about Viking Therapeutics and other companies treating NASH and obesity like Madrigal Pharmaceuticals (MDGL), Terns Pharmaceuticals (TERN) and Sagimet Biosciences (SGMT).</p><p>These stocks swing like crazy and in biotech, you have to know what top biotech funds are buying and more importantly, <b>when to buy the big dips and when to sell the big rips</b>.</p><p>Today, Sarepta Therapeutics said that the US FDA would review an
application seeking traditional approval for its gene therapy to treat a
muscle-wasting disorder by June 21, months after it failed the main
goal of a confirmatory trial, and shares rallied:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhuIM2pWnBg3sJXL973XFkRlLNG16AzeOv63Ay_fAMiQSctk7cBFhaU_I0OWk1WE2RWNlb4yAFuxJvxZ3Wg32_i9urKaYvDWrFXQMssz_C372U3ojlLh0pSf8WI8DZLvIuDxRBRgEy4vsF3ewAjZsN8mmlbF4mUm2VCUsoj2cHCyVYjisVK2fAF1OLBjDEY/s935/SRPT.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="602" data-original-width="935" height="412" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhuIM2pWnBg3sJXL973XFkRlLNG16AzeOv63Ay_fAMiQSctk7cBFhaU_I0OWk1WE2RWNlb4yAFuxJvxZ3Wg32_i9urKaYvDWrFXQMssz_C372U3ojlLh0pSf8WI8DZLvIuDxRBRgEy4vsF3ewAjZsN8mmlbF4mUm2VCUsoj2cHCyVYjisVK2fAF1OLBjDEY/w640-h412/SRPT.jpg" width="640" /></a></div><p></p><p>Among the top holders, you'll see <a href="https://www.nasdaq.com/market-activity/institutional-portfolio/avoro-capital-advisors-llc-957727" target="_blank">Avoro Capital</a>, one of many top biotech funds I track closely.</p><p>After the close today, shares of Iovance (IOVA) rallied 34%:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhvP3nhEbIgZ9dCiAOYiDXudB9wg0yTSgg-yjPwMeWaV0u-nSMLmPMKUZIg8vhAvRgxw1mc-RNNnI6oSULDiY8aF5ogak_gsjMlIUe_wRgpJSWA2KZC8GMG2chXx1poxKake7i6fvjmlWGXkIN03zCRFX2U7Ca8OsDEQWd8Aw86MyVhpW2NrlRzpFD3zKxM/s937/IOVA.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="621" data-original-width="937" height="424" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhvP3nhEbIgZ9dCiAOYiDXudB9wg0yTSgg-yjPwMeWaV0u-nSMLmPMKUZIg8vhAvRgxw1mc-RNNnI6oSULDiY8aF5ogak_gsjMlIUe_wRgpJSWA2KZC8GMG2chXx1poxKake7i6fvjmlWGXkIN03zCRFX2U7Ca8OsDEQWd8Aw86MyVhpW2NrlRzpFD3zKxM/w640-h424/IOVA.jpg" width="640" /></a></div>Why did it rally? Because the FDA <a href="https://finance.yahoo.com/news/1-us-fda-grants-accelerated-210427321.html" target="_blank">granted an accelerated approval</a> for its cell therapy for adult
patients with advanced melanoma, the first such treatment to be approved
for the deadliest form of skin cancer.<p></p><blockquote><p>The agency's greenlight
for the first cell therapy targeting a solid tumor allows use in
patients who have been previously treated with other therapies, but
their cancer has spread to other parts of the body, and cannot be
removed with surgery.</p><p>Lifileucel, branded as Amtagvi, is a tumor
derived immunotherapy composed of a patient's own disease-fighting white
blood cells known as T-cells, with a specific type called
tumor-infiltrating lymphocytes (TIL).</p><p><b>Amtagvi will be sold in the U.S. at a list price of $515,000 per patient, interim CEO Frederick Vogt said on a conference call.</b></p><p><b>The
accelerated approval of Amtagvi is based on safety and effectiveness
data from a global study of 73 patients. The therapy will require
confirmatory trials to receive the U.S. Food and Drug Administration's
traditional approval.</b></p><p><b>"The potential market for TIL therapy is
sizable, as 90% of all cancers are solid tumors compared to 10% as blood
cancers," Dr. Jason Bock, co-founder and CEO of Cell Therapy
Manufacturing Center, said.</b></p><p>The study data showed the objective
response rate, a measure of treatment effectiveness, in patients treated
with Amtagvi at the recommended dose, was 31.5%.</p><p><b>"With approval
in hand, the company has a scarce wholly-owned asset and would make a
nice tuck-in for big pharma who could leverage this even better,"
brokerage Jefferies analyst Michael Yee said in a note.</b></p><p>The
therapy's label comes with a boxed warning for treatment-related
mortality, prolonged severe cytopenia, severe infection, and
cardiopulmonary and renal impairment.</p><p>Vogt said the company does
not see the boxed warning having any impact on sales and expects to
begin reporting significant revenue in the second quarter of this year.</p><p><b>"TIL
therapy offers a promising option for patients with solid tumors," Bock
said, adding "CAR-T or other cell therapies have so far not shown great
success in treating these cancer types."</b></p>Iovance is also conducting a late-stage trial to confirm clinical benefits of the therapy.</blockquote><p>Interestingly, news broke out of FDA approval 20 minutes before market close, shares declined and then rallied after the bell (this is biotech, weird stuff always goes on in biotech).</p><p>Anyway, among the <a href="https://www.nasdaq.com/market-activity/stocks/iova/institutional-holdings" target="_blank">top holders of Iovance</a>, you'll find Avoro again and Perceptive Advisors, another top biotech fund I track closely.</p><p>Biotech is where you'll find the biggest disruptors of tomorrow but also the biggest risks as it's fraught with risks and very volatile.</p><p>I can write books on some of the biotechs I've traded including Avoro's top holding, Apellis Pharmaceuticals which gave me heartburn last year when I bought that massive dip and it kept falling before finally recovering nicely (patience was key there):</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiAaDuBk_3b04eiS_m1ocl-s9_TQnhIjhEXOfwYHBLGI5bSUqZeSoR1X7rByHQBhsxD8bF12cRTOdYdgbEXw9afSxy-4qINMQwk6NBjwsn3lgjtxsmU1urtkGkcNMZ2_H-GxNg4JbztYYLUubvaDVAt3yWkqqMJekLP7djBQXOKAZo4W96mCn7VZwFnN0ab/s952/APLS.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="616" data-original-width="952" height="414" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiAaDuBk_3b04eiS_m1ocl-s9_TQnhIjhEXOfwYHBLGI5bSUqZeSoR1X7rByHQBhsxD8bF12cRTOdYdgbEXw9afSxy-4qINMQwk6NBjwsn3lgjtxsmU1urtkGkcNMZ2_H-GxNg4JbztYYLUubvaDVAt3yWkqqMJekLP7djBQXOKAZo4W96mCn7VZwFnN0ab/w640-h414/APLS.jpg" width="640" /></a></div><p>That's the nature of the biotech beast, it ain't for the faint of heart, that's for sure!</p><p>Alright, it's late Friday evening and I want to watch Shark Tank which I'm taping and hit the sack.</p><p><b>As always, please remember to support this blog by donating via PayPal on the top left-hand side under my picture. Thank you!! </b><br /></p><p>Below, have fun looking into the portfolios of the world's most famous money managers and other top funds.</p><p><span data-preserver-spaces="true"><span data-preserver-spaces="true"><span data-preserver-spaces="true"><b>The links below take you straight to their top holdings</b> and then click to see where they increased and decreased
their holdings (see column headings).</span></span></span></p><p><span data-preserver-spaces="true"><span data-preserver-spaces="true"><span data-preserver-spaces="true">
<b>Top multi-strategy, event driven hedge funds and large hedge fund managers</b><br />
<br />
As the name implies, these hedge funds invest across a wide variety of
hedge fund strategies like L/S Equity, L/S credit, global macro,
convertible arbitrage, risk arbitrage, volatility arbitrage, merger
arbitrage, distressed debt and statistical pair trading. Below are links
to the holdings of some top multi-strategy hedge funds I track
closely:<br />
<br />
1) <a href="http://nasdaq.com/market-activity/institutional-portfolio/appaloosa-lp-986959" target="_blank">Appaloosa LP</a><br />
<br />
2) <a href="http://nasdaq.com/market-activity/institutional-portfolio/citadel-advisors-llc-772640" target="_blank">Citadel Advisors</a> <br />
<br />
3) <a href="http://nasdaq.com/market-activity/institutional-portfolio/balyasny-asset-management-llc-397194" target="_blank">Balyasny Asset Management</a><br />
<br />
4) <a href="http://nasdaq.com/market-activity/institutional-portfolio/point72-asset-management-lp-931797" target="_blank">Point72 Asset Management</a> (Steve Cohen)<br />
<br />
5) <a href="https://nasdaq.com/market-activity/institutional-portfolio/peak6-investments-llc-1069304" target="_blank">Peak6 Investments</a><br />
<br />
6) <a href="http://nasdaq.com/market-activity/institutional-portfolio/kingdon-capital-management-llc-25201" target="_blank">Kingdon Capital Management</a><br />
<br />
7) <a href="http://nasdaq.com/market-activity/institutional-portfolio/millennium-management-llc-610045" target="_blank">Millennium Management</a><br />
<br />
8) <a href="http://nasdaq.com/market-activity/institutional-portfolio/farallon-capital-management-llc-66797" target="_blank">Farallon Capital Management</a><br />
<br />
9) <a href="http://nasdaq.com/market-activity/institutional-portfolio/hbk-investments-l-p-28132" target="_blank">HBK Investments</a><br />
<br />
10) <a href="http://nasdaq.com/market-activity/institutional-portfolio/highbridge-capital-management-llc-63746" target="_blank">Highbridge Capital Management</a><br />
<br />
11) <a href="http://nasdaq.com/market-activity/institutional-portfolio/highland-capital-management-lp-112099" target="_blank">Highland Capital Management</a><br />
<br />
12) <a href="https://nasdaq.com/market-activity/institutional-portfolio/hudson-bay-capital-management-lp-738746" target="_blank">Hudson Bay Capital Management</a><br />
<br />
13) <a href="http://nasdaq.com/market-activity/institutional-portfolio/pentwater-capital-management-lp-770632" target="_blank">Pentwater Capital Management</a><br />
<br />
14) <a href="https://nasdaq.com/market-activity/institutional-portfolio/oz-management-lp-47729" target="_blank">Sculptor Capital Management</a> (formerly known as Och-Ziff Capital Management) <br />
<br />
15) <a href="https://nasdaq.com/market-activity/institutional-portfolio/exoduspoint-capital-management-lp-1077682" target="_blank">ExodusPoint Capital Management</a><br />
<br />
16) <a href="http://nasdaq.com/market-activity/institutional-portfolio/carlson-capital-l-p-54658" target="_blank">Carlson Capital Management</a><br />
<br />
17) <a href="http://nasdaq.com/market-activity/institutional-portfolio/magnetar-financial-llc-699533">Magnetar Capital</a><br />
<br />
18) <a href="http://nasdaq.com/market-activity/institutional-portfolio/whitebox-advisors-llc-610001" target="_blank">Whitebox Advisors</a><br />
<br />
19) <a href="http://nasdaq.com/market-activity/institutional-portfolio/qvt-financial-lp-635267" target="_blank">QVT Financial </a><br />
<br />
20) <a href="http://nasdaq.com/market-activity/institutional-portfolio/paloma-partners-management-co-72620" target="_blank">Paloma Partners</a><br />
<br />
21) <a href="http://nasdaq.com/market-activity/institutional-portfolio/weiss-multi-strategy-advisers-llc-735012" target="_blank">Weiss Multi-Strategy Advisors</a><br />
<br />
22) <a href="http://nasdaq.com/market-activity/institutional-portfolio/york-capital-management-global-advisors-llc-821589" target="_blank">York Capital Management</a> <br /></span></span></span></p><p><span data-preserver-spaces="true"><span data-preserver-spaces="true"><span data-preserver-spaces="true"> </span></span></span></p><p>
<b>Top Global Macro Hedge Funds and Family Offices</b><br />
<br />
These hedge funds gained notoriety because of George Soros, arguably the
best and most famous hedge fund manager. Global macros typically
invest across fixed income, currency, commodity and equity markets.<br />
<br />
George Soros, Carl Icahn, Stanley Druckenmiller, Julian Robertson have
converted their hedge funds into family offices to manage their own
money.<br />
<br />
1) <a href="http://nasdaq.com/market-activity/institutional-portfolio/soros-fund-management-llc-35125" target="_blank">Soros Fund Management</a><br />
<br />
2) <a href="http://nasdaq.com/market-activity/institutional-portfolio/icahn-carl-c-18190" target="_blank">Icahn Associates</a><br />
<br />
3) <a href="http://nasdaq.com/market-activity/institutional-portfolio/duquesne-family-office-llc-873832" target="_blank">Duquesne Family Office</a> (Stanley Druckenmiller)<br />
<br />
4) <a href="http://nasdaq.com/market-activity/institutional-portfolio/bridgewater-associates-lp-699510" target="_blank">Bridgewater Associates</a><br />
<br />
5) <a href="http://nasdaq.com/market-activity/institutional-portfolio/pointstate-capital-lp-845147" target="_blank">Pointstate Capital Partners </a><br />
<br />
6) <a href="http://nasdaq.com/market-activity/institutional-portfolio/caxton-associates-lp-63120" target="_blank">Caxton Associates</a> (Bruce Kovner)<br />
<br />
7) <a href="http://nasdaq.com/market-activity/institutional-portfolio/tudor-investment-corp-et-al-28694" target="_blank">Tudor Investment Corporation</a> (Paul Tudor Jones)<br />
<br />
8) <a href="http://nasdaq.com/market-activity/institutional-portfolio/tiger-management-llc-28592" target="_blank">Tiger Management</a> (Julian Robertson)<br />
<br />
9) <a href="https://nasdaq.com/market-activity/institutional-portfolio/discovery-capital-management-llc--ct-734799" target="_blank">Discovery Capital Management</a> (Rob Citrone)<br />
<br />
10 <a href="http://nasdaq.com/market-activity/institutional-portfolio/moore-capital-management-lp-792208" target="_blank">Moore Capital Management</a></p><p><span data-preserver-spaces="true"><span data-preserver-spaces="true"><span data-preserver-spaces="true">11) <a href="https://www.nasdaq.com/market-activity/institutional-portfolio/rokos-capital-management-llp-1077564" target="_blank">Rokos Capital Management</a> <br />
<br />
12) <a href="https://nasdaq.com/market-activity/institutional-portfolio/element-capital-management-llc-927461" target="_blank">Element Capital</a><br />
<br />
13) <a href="http://nasdaq.com/market-activity/institutional-portfolio/bill--melinda-gates-foundation-trust-98131" target="_blank">Bill and Melinda Gates Foundation Trust</a> (Michael Larson, the <a href="http://www.wsj.com/articles/this-mans-job-make-bill-gates-richer-1411093811" target="_blank">man behind Gates</a>)<br />
<br />
<b>Top Quant and Market Neutral Hedge Funds</b><br />
<br />
These funds use sophisticated mathematical algorithms to make their
returns, typically using high-frequency models so they churn their
portfolios often. A few of them have outstanding long-term track records
and many believe <a href="http://pensionpulse.blogspot.ca/2017/02/hedge-fund-quants-taking-over-world.html" target="_blank">quants are taking over the world</a>.
They typically only hire PhDs in mathematics, physics and computer
science to develop their algorithms. Market neutral funds will
engage in pair trading to remove market beta. Some are large asset
managers that specialize in factor investing.<br />
<br />
1) <a href="http://nasdaq.com/market-activity/institutional-portfolio/alyeska-investment-group-lp-797990" target="_blank">Alyeska Investment Group</a><br />
<br />
2) <a href="http://nasdaq.com/market-activity/institutional-portfolio/renaissance-technologies-llc-63203" target="_blank">Renaissance Technologies</a><br />
<br />
3) <a href="http://nasdaq.com/market-activity/institutional-portfolio/d-e-shaw--co-inc-63744" target="_blank">DE Shaw & Co.</a><br />
<br />
4) <a href="http://nasdaq.com/market-activity/institutional-portfolio/two-sigma-investments-llc-396921" target="_blank">Two Sigma Investments</a><br />
<br />
5) <a href="https://nasdaq.com/market-activity/institutional-portfolio/cubist-systematic-strategies-llc-942304" target="_blank">Cubist Systematic Strategies</a> (a quant division <a href="https://www.point72.com/cubist/" target="_blank">of Point72</a>)<br />
<br />
6) <a href="https://www.nasdaq.com/market-activity/institutional-portfolio/man-group-plc-961052" target="_blank">Man Group</a></span></span></span></p><p><span data-preserver-spaces="true"><span data-preserver-spaces="true"><span data-preserver-spaces="true">
7) <a href="http://nasdaq.com/market-activity/institutional-portfolio/analytic-investors-llc-66048" target="_blank">Analytic Investors</a><br />
<br />
8) <a href="https://nasdaq.com/market-activity/institutional-portfolio/aqr-capital-management-llc-98293" target="_blank">AQR Capital Management</a><br />
<br />
9) <a href="https://nasdaq.com/market-activity/institutional-portfolio/dimensional-fund-advisors-lp-24027" target="_blank">Dimensional Fund Advisors</a> <br />
<br />
10) <a href="http://nasdaq.com/market-activity/institutional-portfolio/quantitative-investment-management-llc-788568" target="_blank">Quantitative Investment Management </a><br />
<br />
11) <a href="http://nasdaq.com/market-activity/institutional-portfolio/oxford-asset-management-784563" target="_blank">Oxford Asset Management</a><br />
<br />
12) <a href="http://nasdaq.com/market-activity/institutional-portfolio/pdt-partners-llc-899917" target="_blank">PDT Partners</a><br />
<br />
13) <a href="https://nasdaq.com/market-activity/institutional-portfolio/angelo-gordon--co-lp-22125" target="_blank">Angelo Gordon</a><br />
<br />
14) <a href="https://nasdaq.com/market-activity/institutional-portfolio/quantitative-systematic-strategies-llc-927346" target="_blank">Quantitative Systematic Strategies</a><br />
<br />
15) <a href="https://nasdaq.com/market-activity/institutional-portfolio/quantitative-investment-management-llc-788568" target="_blank">Quantitative Investment Management</a><br />
<br />
16) <a href="https://nasdaq.com/market-activity/institutional-portfolio/bayesian-capital-management-lp-987169" target="_blank">Bayesian Capital Management</a><br />
<br />
17) <a href="http://nasdaq.com/market-activity/institutional-portfolio/saba-capital-management-lp-848035" target="_blank">SABA Capital Management</a><br />
<br />
18) <a href="https://nasdaq.com/market-activity/institutional-portfolio/quadrature-capital-ltd-979335" target="_blank">Quadrature Capital</a><br />
<br />
19) <a href="https://nasdaq.com/market-activity/institutional-portfolio/simplex-trading-llc-850999" target="_blank">Simplex Trading</a><br />
<br />
<b>Top Deep Value,</b><b> Activist, Growth at a Reasonable Price, Event Driven and Distressed Debt Funds</b><br />
<br />
These are among the top long-only funds that everyone tracks. They
include funds run by legendary investors like Warren Buffet, Seth
Klarman, Ron Baron and Ken Fisher. Activist investors like to make
investments in companies where management lacks the proper incentives to
maximize shareholder value. They differ from traditional L/S hedge
funds by having a more concentrated portfolio. Distressed debt funds
typically invest in debt of a company but sometimes take equity
positions.<br />
<br />
1) <a href="http://nasdaq.com/market-activity/institutional-portfolio/abrams-capital-management-lp-708605" target="_blank">Abrams Capital Management</a> (the <a href="http://pensionpulse.blogspot.ca/2014/06/one-man-wealth-machine.html" target="_blank">one-man wealth machine</a>)<br />
<br />
2) <a href="http://nasdaq.com/market-activity/institutional-portfolio/berkshire-hathaway-inc-54239" target="_blank">Berkshire Hathaway</a><br />
<br />
3) <a href="https://nasdaq.com/market-activity/institutional-portfolio/tci-fund-management-ltd-973274" target="_blank">TCI Fund Management</a><br />
<br />
4) <a href="http://www.baronfunds.com/mutual-funds/baron-partners-fund/bptrx/?tab=Holdings#portfolioHoldings" target="_blank">Baron Partners Fund</a> (click <a href="http://www.baronfunds.com/" target="_blank">here</a> to view other Baron funds)<br />
<br />
5) <a href="http://nasdaq.com/market-activity/institutional-portfolio/bhr-capital-llc-828189" target="_blank">BHR Capital</a><br />
<br />
6) <a href="http://nasdaq.com/market-activity/institutional-portfolio/fisher-asset-management-llc-14186" target="_blank">Fisher Asset Management</a><br />
<br />
7) <a href="http://nasdaq.com/market-activity/institutional-portfolio/baupost-group-llcma-86488" target="_blank">Baupost Group</a><br />
<br />
8) <a href="http://nasdaq.com/market-activity/institutional-portfolio/fairfax-financial-holdings-ltd-can-11605" target="_blank">Fairfax Financial Holdings</a><br />
<br />
9) <a href="http://nasdaq.com/market-activity/institutional-portfolio/fairholme-capital-management-llc-62805" target="_blank">Fairholme Capital</a> <br />
<br />
10) <a href="http://nasdaq.com/market-activity/institutional-portfolio/gotham-asset-management-llc-848155" target="_blank">Gotham Asset Management </a><br />
<br />
11) <a href="http://nasdaq.com/market-activity/institutional-portfolio/fir-tree-inc-62657" target="_blank">Fir Tree Partners</a><br />
<br />12) <a href="https://www.nasdaq.com/market-activity/institutional-portfolio/elliott-investment-management-lp-1106255" target="_blank">Elliott Investment Management</a> (Paul Singer)</span></span></span></p><p><span data-preserver-spaces="true"><span data-preserver-spaces="true"><span data-preserver-spaces="true">
13) <a href="http://nasdaq.com/market-activity/institutional-portfolio/jana-partners-llc-90728" target="_blank">Jana Partners</a><br />
<br />
14) <a href="http://nasdaq.com/market-activity/institutional-portfolio/lmm-llc-84490" target="_blank">Miller Value Partners</a> (Bill Miller)<br />
<br />
15) <a href="http://nasdaq.com/market-activity/institutional-portfolio/highfields-capital-management-lp-59692" target="_blank">Highfields Capital Management</a><br />
<br />
16) <a href="http://nasdaq.com/market-activity/institutional-portfolio/eminence-capital-llc-73637" target="_blank">Eminence Capital </a><br />
<br />
17) <a href="http://nasdaq.com/market-activity/institutional-portfolio/pershing-square-capital-management-lp-683405" target="_blank">Pershing Square Capital Management</a><br />
<br />
18) <a href="http://nasdaq.com/market-activity/institutional-portfolio/new-mountain-vantage-advisers-llc-735066" target="_blank">New Mountain Vantage Advisers</a><br />
<br />
19) <a href="http://nasdaq.com/market-activity/institutional-portfolio/atlantic-investment-management-inc-52273" target="_blank">Atlantic Investment Management</a><br />
<br />
20) <a href="https://nasdaq.com/market-activity/institutional-portfolio/polaris-capital-management-llc-663596" target="_blank">Polaris Capital Management</a><br />
<br />
21) <a href="http://nasdaq.com/market-activity/institutional-portfolio/third-point-llc-41160" target="_blank">Third Point</a><br />
<br />
22) <a href="http://nasdaq.com/market-activity/institutional-portfolio/marcato-capital-management-lp-874498" target="_blank">Marcato Capital Management</a><br />
<br />
23) <a href="http://nasdaq.com/market-activity/institutional-portfolio/glenview-capital-management-llc-85711" target="_blank">Glenview Capital Management</a><br />
<br />
24) <a href="http://nasdaq.com/market-activity/institutional-portfolio/apollo-management-holdings-lp-798066" target="_blank">Apollo Management</a><br />
<br />
25) <a href="http://nasdaq.com/market-activity/institutional-portfolio/lasry-marc-595278" target="_blank">Avenue Capital</a><br />
<br />
26) <a href="http://nasdaq.com/market-activity/institutional-portfolio/armistice-capital-llc-930212">Armistice Capital</a><br />
<br />
27) <a href="http://nasdaq.com/market-activity/institutional-portfolio/blue-harbour-group-lp-699347" target="_blank">Blue Harbor Group</a><br />
<br />
28) <a href="http://nasdaq.com/market-activity/institutional-portfolio/brigade-capital-management-llc-764857" target="_blank">Brigade Capital Management</a><br />
<br />
29) <a href="http://nasdaq.com/market-activity/institutional-portfolio/caspian-capital-lp-861616" target="_blank">Caspian Capital</a><br />
<br />
30) <a href="http://nasdaq.com/market-activity/institutional-portfolio/kerrisdale-advisers-llc-899802" target="_blank">Kerrisdale Advisers</a><br />
<br />
31) <a href="http://nasdaq.com/market-activity/institutional-portfolio/knighthead-capital-management-llc-848118" target="_blank">Knighthead Capital Management</a><br />
<br />
32) <a href="http://nasdaq.com/market-activity/institutional-portfolio/relational-investors-llc-44185" target="_blank">Relational Investors</a><br />
<br />
33) <a href="http://nasdaq.com/market-activity/institutional-portfolio/roystone-capital-management-lp-920624" target="_blank">Roystone Capital Management</a><br />
<br />
34) <a href="http://nasdaq.com/market-activity/institutional-portfolio/scopia-capital-management-llc-621074" target="_blank">Scopia Capital Management</a><br />
<br />
35) <a href="http://nasdaq.com/market-activity/institutional-portfolio/schneider-capital-management-corp-225851" target="_blank">Schneider Capital Management </a><br />
<br />
36) <a href="http://nasdaq.com/market-activity/institutional-portfolio/valueact-holdings-lp-762761" target="_blank">ValueAct Capital</a><br />
<br />
37) <a href="http://nasdaq.com/market-activity/institutional-portfolio/vulcan-value-partners-llc-888564" target="_blank">Vulcan Value Partners </a><br />
<br />
38) <a href="http://nasdaq.com/market-activity/institutional-portfolio/okumus-fund-management-ltd-832547" target="_blank">Okumus Fund Management</a><br />
<br />
39) <a href="http://nasdaq.com/market-activity/institutional-portfolio/eagle-capital-management-llc-66664" target="_blank">Eagle Capital Management</a><br />
<br />
40) <a href="http://nasdaq.com/market-activity/institutional-portfolio/sasco-capital-inc--ct-39378" target="_blank">Sasco Capital</a><br />
<br />
41) <a href="http://nasdaq.com/market-activity/institutional-portfolio/lyrical-asset-management-lp-874518" target="_blank">Lyrical Asset Management</a><br />
<br />
42) <a href="http://nasdaq.com/market-activity/institutional-portfolio/gabelli-funds-llc-155615" target="_blank">Gabelli Funds</a><br />
<br />
43) <a href="http://nasdaq.com/market-activity/institutional-portfolio/brave-warrior-advisors-llc-885406" target="_blank">Brave Warrior Advisors</a><br />
<br />
44) <a href="http://nasdaq.com/market-activity/institutional-portfolio/matrix-asset-advisors-incny-37145">Matrix Asset Advisors</a><br />
<br />
45) <a href="http://nasdaq.com/market-activity/institutional-portfolio/jet-capital-investors-l-p-664095" target="_blank">Jet Capital</a><br />
<br />
46) <a href="http://nasdaq.com/market-activity/institutional-portfolio/conatus-capital-management-lp-797935">Conatus Capital Management</a><br />
<br />
47) <a href="http://nasdaq.com/market-activity/institutional-portfolio/starboard-value-lp-852046" target="_blank">Starboard Value </a><br />
<br />
48) <a href="http://nasdaq.com/market-activity/institutional-portfolio/pzena-investment-management-llc-86989">Pzena Investment Management</a><br />
<br />
49) <a href="http://nasdaq.com/market-activity/institutional-portfolio/trian-fund-management-lp-693103" target="_blank">Trian Fund Management</a></span></span></span></p><p><span data-preserver-spaces="true"><span data-preserver-spaces="true"><span data-preserver-spaces="true">50) <a href="https://www.nasdaq.com/market-activity/institutional-portfolio/oaktree-capital-management-lp-63164" target="_blank">Oaktree Capital Management</a></span></span></span></p><p><span data-preserver-spaces="true"><span data-preserver-spaces="true"><span data-preserver-spaces="true">51) <a href="https://www.nasdaq.com/market-activity/institutional-portfolio/fayez-sarofim--co-22084" target="_blank">Fayez Sarofim & Co </a></span></span></span></p><p><span data-preserver-spaces="true"><span data-preserver-spaces="true"><span data-preserver-spaces="true">52) </span></span></span><span data-preserver-spaces="true"><span data-preserver-spaces="true"><span data-preserver-spaces="true"><a href="http://nasdaq.com/market-activity/institutional-portfolio/southeastern-asset-management-inctn-18662" target="_blank">Southeastern Asset Management</a></span></span></span><span data-preserver-spaces="true"><span data-preserver-spaces="true"><span data-preserver-spaces="true"> <br />
<br />
<b>Top Long/Short Hedge Funds</b><br />
<br />
These hedge funds go long shares they think will rise in value and short
those they think will fall. Along with global macro funds, they
command the bulk of hedge fund assets. There are many L/S funds but
here is a small sample of some well-known funds.<br />
<br />
1) <a href="http://nasdaq.com/market-activity/institutional-portfolio/adage-capital-partners-gp-llc-95432" target="_blank">Adage Capital Management</a><br />
<br />
2) <a href="http://nasdaq.com/market-activity/institutional-portfolio/viking-global-investors-lp-72854" target="_blank">Viking Global Investors</a><br />
<br />
3) <a href="http://nasdaq.com/market-activity/institutional-portfolio/greenlight-capital-inc-62659" target="_blank">Greenlight Capital</a><br />
<br />
4) <a href="http://nasdaq.com/market-activity/institutional-portfolio/maverick-capital-ltd-75571" target="_blank">Maverick Capital</a><br />
<br />
5) <a href="http://nasdaq.com/market-activity/institutional-portfolio/pointstate-capital-lp-845147" target="_blank">Pointstate Capital Partners </a><br />
<br />
6) <a href="http://nasdaq.com/market-activity/institutional-portfolio/marathon-asset-management-llp-61811" target="_blank">Marathon Asset Management</a><br />
<br />
7) <a href="http://nasdaq.com/market-activity/institutional-portfolio/tiger-global-management-llc-98158" target="_blank">Tiger Global Management</a> (Chase Coleman)<br />
<br />
8) <a href="http://nasdaq.com/market-activity/institutional-portfolio/coatue-management-llc-84430" target="_blank">Coatue Management</a><br />
<br />
9) <a href="https://nasdaq.com/market-activity/institutional-portfolio/d1-capital-partners-lp-1077691" target="_blank">D1 Capital Partners</a><br />
<br />
10) <a href="http://nasdaq.com/market-activity/institutional-portfolio/artis-capital-management-lp-621460" target="_blank">Artis Capital Management</a><br />
<br />
11) <a href="http://nasdaq.com/market-activity/institutional-portfolio/fox-point-capital-management-llc-734167" target="_blank">Fox Point Capital Management</a><br />
<br />
12) <a href="http://nasdaq.com/market-activity/institutional-portfolio/jabre-capital-partners-sa-775775" target="_blank">Jabre Capital Partners</a><br />
<br />
13) <a href="http://nasdaq.com/market-activity/institutional-portfolio/lone-pine-capital-llc-51462" target="_blank">Lone Pine Capital</a><br />
<br />
14) <a href="http://nasdaq.com/market-activity/institutional-portfolio/paulson--co-inc-39440" target="_blank">Paulson & Co.</a><br />
<br />
15) <a href="http://nasdaq.com/market-activity/institutional-portfolio/bronson-point-management-llc-847531" target="_blank">Bronson Point Management</a><br />
<br />
16) <a href="http://nasdaq.com/market-activity/institutional-portfolio/hoplite-capital-management-llc-622391" target="_blank">Hoplite Capital Management</a><br />
<br />
17) <a href="http://nasdaq.com/market-activity/institutional-portfolio/lsv-asset-management-62699" target="_blank">LSV Asset Management</a><br />
<br />
18) <a href="http://nasdaq.com/market-activity/institutional-portfolio/hussman-econometrics-advisors-inc-376503" target="_blank">Hussman Strategic Advisors</a><br />
<br />
19) <a href="http://nasdaq.com/market-activity/institutional-portfolio/cantillon-capital-management-llc-622210" target="_blank">Cantillon Capital Management </a> <br />
<br />
20) <a href="http://nasdaq.com/market-activity/institutional-portfolio/brookside-capital-management-llc-89380" target="_blank">Brookside Capital Management</a><br />
<br />
21) <a href="http://nasdaq.com/market-activity/institutional-portfolio/blue-ridge-capital-llc-225610" target="_blank">Blue Ridge Capital</a><br />
<br />
22) <a href="http://nasdaq.com/market-activity/institutional-portfolio/iridian-asset-management-llcct-39513" target="_blank">Iridian Asset Management</a><br />
<br />
23) <a href="http://nasdaq.com/market-activity/institutional-portfolio/clough-capital-partners-l-p-621542" target="_blank">Clough Capital Partners</a><br />
<br />
24) <a href="http://nasdaq.com/market-activity/institutional-portfolio/glg-partners-lp-635575" target="_blank">GLG Partners LP</a><br />
<br />
25) <a href="http://nasdaq.com/market-activity/institutional-portfolio/cadence-capital-management-llc-112641" target="_blank">Cadence Capital Management</a><br />
<br />
26) <a href="http://nasdaq.com/market-activity/institutional-portfolio/honeycomb-asset-management-lp-1015544" target="_blank">Honeycomb Asset Management</a><br />
<br />
27) <a href="http://nasdaq.com/market-activity/institutional-portfolio/new-mountain-vantage-advisers-llc-735066" target="_blank">New Mountain Vantage</a><br />
<br />
28) <a href="https://nasdaq.com/market-activity/institutional-portfolio/penserra-capital-management-llc-986258" target="_blank">Penserra Capital Management</a><br />
<br />
29) <a href="https://nasdaq.com/market-activity/institutional-portfolio/eminence-capital-lp-73637" target="_blank">Eminence Capital</a><br />
<br />
30) <a href="http://nasdaq.com/quotes/market-activity/steadfast-capital-management-lp-395926" target="_blank">Steadfast Capital Management</a><br />
<br />
31) <a href="http://nasdaq.com/market-activity/institutional-portfolio/brookside-capital-management-llc-89380" target="_blank">Brookside Capital Management</a><br />
<br />
32) <a href="http://nasdaq.com/market-activity/institutional-portfolio/par-capital-management-inc-45878" target="_blank">PAR Capital Capital Management</a><br />
<br />
33) <a href="http://nasdaq.com/market-activity/institutional-portfolio/gilder-gagnon-howe--co-llc-54103" target="_blank">Gilder, Gagnon, Howe & Co</a><br />
<br />
34) <a href="http://nasdaq.com/market-activity/institutional-portfolio/brahman-capital-corp-109829" target="_blank">Brahman Capital</a><br />
<br />
35) <a href="http://nasdaq.com/market-activity/institutional-portfolio/bridger-management-llc-98039" target="_blank">Bridger Management </a><br />
<br />
36) <a href="http://nasdaq.com/market-activity/institutional-portfolio/kensico-capital-management-corp-75607" target="_blank">Kensico Capital Management </a><br />
<br />
37) <a href="http://nasdaq.com/market-activity/institutional-portfolio/kynikos-associates-lp-850379" target="_blank">Kynikos Associates</a><br />
<br />
38) <a href="http://nasdaq.com/market-activity/institutional-portfolio/soroban-capital-partners-llc-852605" target="_blank">Soroban Capital Partners</a><br />
<br />
39) <a href="http://nasdaq.com/market-activity/institutional-portfolio/passport-capital-llc-699388" target="_blank">Passport Capital</a><br />
<br />
40)<a href="http://nasdaq.com/market-activity/institutional-portfolio/pennant-capital-management-llc-101344" target="_blank"> Pennant Capital Management</a><br />
<br />
41) <a href="http://nasdaq.com/market-activity/institutional-portfolio/mason-capital-management-llc-397462" target="_blank">Mason Capital Management</a><br />
<br />
42) <a href="http://nasdaq.com/market-activity/institutional-portfolio/tide-point-capital-management-lp-927436" target="_blank">Tide Point Capital Management</a> <br />
<br />
43) <a href="http://nasdaq.com/market-activity/institutional-portfolio/sirios-capital-management-l-p-72493" target="_blank">Sirios Capital Management </a><br />
<br />
44) <a href="http://nasdaq.com/market-activity/institutional-portfolio/hayman-capital-management-lp-763963" target="_blank">Hayman Capital Management</a><br />
<br />
45) <a href="http://nasdaq.com/market-activity/institutional-portfolio/highside-capital-management-l-p-622653" target="_blank">Highside Capital Management</a><br />
<br />
46) <a href="http://nasdaq.com/market-activity/institutional-portfolio/tremblant-capital-group-699415" target="_blank">Tremblant Capital Group</a><br />
<br />
47) <a href="http://nasdaq.com/market-activity/institutional-portfolio/decade-capital-management-llc-770639" target="_blank">Decade Capital Management</a><br />
<br />
48) <a href="http://nasdaq.com/market-activity/institutional-portfolio/suvretta-capital-management-llc-927428" target="_blank">Suvretta Capital Management</a><br />
<br />
49) <a href="http://nasdaq.com/market-activity/institutional-portfolio/bloom-tree-partners-llc-899807" target="_blank">Bloom Tree Partners </a><br />
<br />
50) <a href="http://nasdaq.com/market-activity/institutional-portfolio/cadian-capital-management-lp-770630" target="_blank">Cadian Capital Management</a><br />
<br />
51) <a href="http://nasdaq.com/market-activity/institutional-portfolio/matrix-capital-management-company-llc-755364" target="_blank">Matrix Capital Management</a><br />
<br />
52) <a href="http://nasdaq.com/market-activity/institutional-portfolio/rima-senvest-management-llc-675634" target="_blank">Senvest Partners</a><br />
<br />
53) <a href="http://nasdaq.com/market-activity/institutional-portfolio/falcon-edge-capital-lp-899349" target="_blank">Falcon Edge Capital Management</a><br />
<br />
54) <a href="http://nasdaq.com/market-activity/institutional-portfolio/park-west-asset-management-llc-734917" target="_blank">Park West Asset Management</a><br />
<br />
55) <a href="http://nasdaq.com/market-activity/institutional-portfolio/melvin-capital-management-lp-957926" target="_blank">Melvin Capital Partners</a> (</span></span></span>Plotkin shut down Melvin after <a href="https://www.bloomberg.com/news/articles/2022-05-18/gabe-plotkin-s-melvin-capital-to-wind-down-funds-after-losses#xj4y7vzkg" target="_blank">reeling rom Redditor attack</a>)</p><p><span data-preserver-spaces="true"><span data-preserver-spaces="true"><span data-preserver-spaces="true">
56) <a href="http://nasdaq.com/market-activity/institutional-portfolio/owl-creek-asset-management-lp-662919" target="_blank">Owl Creek Asset Management</a><br />
<br />
57) <a href="http://nasdaq.com/market-activity/institutional-portfolio/portolan-capital-management-llc-698843" target="_blank">Portolan Capital Management</a><br />
<br />
58) <a href="http://nasdaq.com/market-activity/institutional-portfolio/proxima-capital-management-llc-821427" target="_blank">Proxima Capital Management</a><br />
<br />
59) <a href="http://nasdaq.com/market-activity/institutional-portfolio/tourbillon-capital-partners-lp-927470" target="_blank">Tourbillon Capital Partners</a><br />
<br />
60) <a href="https://nasdaq.com/market-activity/institutional-portfolio/impala-asset-management-llc-664382?page=2">Impala Asset Management</a><br />
<br />
61) <a href="http://nasdaq.com/market-activity/institutional-portfolio/valinor-management-llc-770306" target="_blank">Valinor Management</a><br />
<br />
62) <a href="http://nasdaq.com/market-activity/institutional-portfolio/marshall-wace-llp-665654" target="_blank">Marshall Wace</a><br />
<br />
63) <a href="http://nasdaq.com/market-activity/institutional-portfolio/light-street-capital-management-llc-899724" target="_blank">Light Street Capital Management</a><br />
<br />
64) <a href="http://nasdaq.com/market-activity/institutional-portfolio/rock-springs-capital-management-lp-927624" target="_blank">Rock Springs Capital Management</a><br />
<br />
65) <a href="https://nasdaq.com/market-activity/institutional-portfolio/rubric-capital-management-lp-1014598" target="_blank">Rubric Capital Management</a><br />
<br />
66) <a href="http://nasdaq.com/market-activity/institutional-portfolio/whale-rock-capital-management-llc-732563" target="_blank">Whale Rock Capital</a> <br />
<br />
67) <a href="https://nasdaq.com/market-activity/institutional-portfolio/skye-global-management-lp-1045420" target="_blank">Skye Global Management</a><br />
<br />
68) <a href="http://nasdaq.com/market-activity/institutional-portfolio/york-capital-management-global-advisors-llc-821589" target="_blank">York Capital Management</a><br />
<br />
69) <a href="http://nasdaq.com/market-activity/institutional-portfolio/zweig-dimenna-associates-llc-881683" target="_blank">Zweig-Dimenna Associates</a><br />
<br />
<b>Top Sector and Specialized Funds</b><br />
<br />
I like tracking activity funds that specialize in real estate, biotech,
healthcare, retail and other sectors like mid, small and micro caps.
Here are some funds worth tracking closely.<br />
<br />
1) <a href="https://nasdaq.com/market-activity/institutional-portfolio/avoro-capital-advisors-llc-957727" target="_blank">Avoro Capital Advisors</a> (formerly Venbio Select Advisors)<br />
<br />
2) <a href="http://nasdaq.com/market-activity/institutional-portfolio/baker-bros-advisors-lp-596248" target="_blank">Baker Brothers Advisors</a><br />
<br />
3) <a href="http://nasdaq.com/market-activity/institutional-portfolio/perceptive-advisors-llc-401881" target="_blank">Perceptive Advisors </a><br />
<br />
4) <a href="http://nasdaq.com/market-activity/institutional-portfolio/rtw-investments-llc-829758" target="_blank">RTW Investments</a><br />
<br />
5) <a href="http://nasdaq.com/market-activity/institutional-portfolio/healthcor-management-lp-690340" target="_blank">Healthcor Management</a><br />
<br />
6) <a href="http://nasdaq.com/market-activity/institutional-portfolio/orbimed-advisors-llc-80973" target="_blank">Orbimed Advisors</a><br />
<br />
7) <a href="http://nasdaq.com/market-activity/institutional-portfolio/deerfield-management-co-ny-29900" target="_blank">Deerfield Management</a><br />
<br />
8) <a href="http://nasdaq.com/market-activity/institutional-portfolio/bb-biotech-ag-19180" target="_blank">BB Biotech AG</a><br />
<br />
9) <a href="https://nasdaq.com/market-activity/institutional-portfolio/birchview-capital-lp-943516" target="_blank">Birchview Capital</a><br />
<br />
10) <a href="http://nasdaq.com/market-activity/institutional-portfolio/ghost-tree-capital-llc-927644" target="_blank">Ghost Tree Capital </a><br />
<br />
11) <a href="http://nasdaq.com/market-activity/institutional-portfolio/sectoral-asset-management-inc-613916" target="_blank">Sectoral Asset Management</a><br />
<br />
12) <a href="http://nasdaq.com/market-activity/institutional-portfolio/oracle-investment-management-inc-226140" target="_blank">Oracle Investment Management </a><br />
<br />
13) <a href="http://nasdaq.com/market-activity/institutional-portfolio/palo-alto-investors-llc-653857" target="_blank">Palo Alto Investors</a><br />
<br />
14) <a href="http://nasdaq.com/market-activity/institutional-portfolio/consonance-capital-management-lp-877322" target="_blank">Consonance Capital Management</a><br />
<br />
15) <a href="http://nasdaq.com/market-activity/institutional-portfolio/camber-capital-management-llc-786838" target="_blank">Camber Capital Management</a><br />
<br />
16) <a href="http://nasdaq.com/market-activity/institutional-portfolio/redmile-group-llc-770418" target="_blank">Redmile Group</a><br />
<br />
17) <a href="https://www.nasdaq.com/market-activity/institutional-portfolio/casdin-capital-llc-986225" target="_blank">Casdin Capital</a></span></span></span></p><p><span data-preserver-spaces="true"><span data-preserver-spaces="true"><span data-preserver-spaces="true">18) <a href="http://nasdaq.com/market-activity/institutional-portfolio/bridger-management-llc-98039" target="_blank">Bridger Capital Management</a><br />
<br />
19) <a href="http://nasdaq.com/market-activity/institutional-portfolio/boxer-capital-llc-806527" target="_blank">Boxer Capital</a></span></span></span></p><p><span data-preserver-spaces="true"><span data-preserver-spaces="true"><span data-preserver-spaces="true">
20) <a href="https://www.nasdaq.com/market-activity/institutional-portfolio/omega-fund-management-llc-961022" target="_blank">Omega Fund Management</a></span></span></span></p><p><span data-preserver-spaces="true"><span data-preserver-spaces="true"><span data-preserver-spaces="true">
21) <a href="http://nasdaq.com/market-activity/institutional-portfolio/bridgeway-capital-management-inc-75737" target="_blank">Bridgeway Capital Management</a><br />
<br />
22) <a href="http://nasdaq.com/market-activity/institutional-portfolio/cohen--steers-inc-629153" target="_blank">Cohen & Steers</a><br />
<br />
23) <a href="http://nasdaq.com/market-activity/institutional-portfolio/cardinal-capital-management-llc-ct-376773" target="_blank">Cardinal Capital Management</a><br />
<br />
24) <a href="http://nasdaq.com/market-activity/institutional-portfolio/munder-capital-management-81056" target="_blank">Munder Capital Management</a><br />
<br />
25) <a href="http://nasdaq.com/market-activity/institutional-portfolio/diamond-hill-capital-management-inc-395031" target="_blank">Diamondhill Capital Management </a><br />
<br />
26) <a href="http://nasdaq.com/market-activity/institutional-portfolio/cortina-asset-management-llc-672753" target="_blank">Cortina Asset Management</a><br />
<br />
27) <a href="http://nasdaq.com/market-activity/institutional-portfolio/geneva-capital-management-ltdwi-62115" target="_blank">Geneva Capital Management</a><br />
<br />
28) <a href="http://nasdaq.com/market-activity/institutional-portfolio/criterion-capital-management-llc-629917" target="_blank">Criterion Capital Management </a><br />
<br />
29) <a href="http://nasdaq.com/market-activity/institutional-portfolio/daruma-capital-management-llc-62104" target="_blank">Daruma Capital Management</a><br />
<br />
30) <a href="http://nasdaq.com/market-activity/institutional-portfolio/12-west-capital-management-lp-872822" target="_blank">12 West Capital Management</a><br />
<br />
31) <a href="http://nasdaq.com/market-activity/institutional-portfolio/ra-capital-management-llc-693222" target="_blank">RA Capital Management</a><br />
<br />
32) <a href="http://nasdaq.com/market-activity/institutional-portfolio/sarissa-capital-management-lp-907328" target="_blank">Sarissa Capital Management</a><br />
<br />
33) <a href="http://nasdaq.com/market-activity/institutional-portfolio/rock-springs-capital-management-lp-927624" target="_blank">Rock Springs Capital Management</a><br />
<br />
34)<a href="http://nasdaq.com/market-activity/institutional-portfolio/senzar-asset-management-llc-927450"> Senzar Asset Management</a><br />
<br />
35) <a href="https://www.nasdaq.com/market-activity/institutional-portfolio/paradigm-biocapital-advisors-lp-1201558" target="_blank">Paradigm Biocapital Advisors</a><br />
<br />
36) <a href="http://nasdaq.com/market-activity/institutional-portfolio/sphera-funds-management-ltd-833867" target="_blank">Sphera Funds </a><br />
<br />
37) <a href="http://nasdaq.com/market-activity/institutional-portfolio/tang-capital-management-llc-406622" target="_blank">Tang Capital Management</a><br />
<br />
38) <a href="http://nasdaq.com/market-activity/institutional-portfolio/thomson-horstmann--bryant-inc-49732">Thomson Horstmann & Bryant</a><br />
<br />
39) <a href="http://nasdaq.com/market-activity/institutional-portfolio/ecor1-capital-llc-915876">Ecor1 Capital</a><br />
<br />
40) <a href="http://nasdaq.com/market-activity/institutional-portfolio/opaleye-management-inc-924793" target="_blank">Opaleye Management</a><br />
<br />
41) <a href="http://nasdaq.com/market-activity/institutional-portfolio/nea-management-company-llc-848050" target="_blank">NEA Management Company</a><br />
<br />
42) <a href="https://www.nasdaq.com/market-activity/institutional-portfolio/sofinnova-investments-inc-955353" target="_blank">Sofinnova Investments</a> </span></span></span></p><p><span data-preserver-spaces="true"><span data-preserver-spaces="true"><span data-preserver-spaces="true">43) <a href="https://nasdaq.com/market-activity/institutional-portfolio/great-point-partners-i-lp-696437" target="_blank">Great Point Partners</a><br />
<br />
44) <a href="https://nasdaq.com/market-activity/institutional-portfolio/tekla-capital-management-llc-646528" target="_blank">Tekla Capital Management</a><br />
<br />
45) <a href="https://nasdaq.com/market-activity/institutional-portfolio/van-berkom--associates-inc-859033" target="_blank">Van Berkom and Associates</a><br />
<br />
<b>Mutual Funds and Asset Managers</b><br />
<br />
Mutual funds and large asset managers are not hedge funds but their
sheer size makes them important players. Some asset managers have
excellent track records. Below, are a few funds investors track closely.<br />
<br />
1) <a href="http://nasdaq.com/market-activity/institutional-portfolio/fmr-llc-12407" target="_blank">Fidelity</a><br />
<br />
2) <a href="https://nasdaq.com/market-activity/institutional-portfolio/blackrock-inc-711679">BlackRock Inc</a><br />
<br />
3) <a href="http://nasdaq.com/market-activity/institutional-portfolio/wellington-management-co-llp-21351" target="_blank">Wellington Management</a><br />
<br />
4) <a href="http://nasdaq.com/market-activity/institutional-portfolio/aqr-capital-management-llc-98293" target="_blank">AQR Capital Management</a><br />
<br />
5) <a href="http://nasdaq.com/market-activity/institutional-portfolio/sands-capital-management-llc-62214" target="_blank">Sands Capital Management</a><br />
<br />
6) <a href="http://nasdaq.com/market-activity/institutional-portfolio/brookfield-asset-management-inc-5345" target="_blank">Brookfield Asset Management</a><br />
<br />
7) <a href="http://nasdaq.com/market-activity/institutional-portfolio/dodge--cox-27169" target="_blank">Dodge & Cox</a><br />
<br />
8) <a href="http://nasdaq.com/market-activity/institutional-portfolio/eaton-vance-management-58625" target="_blank">Eaton Vance Management</a><br />
<br />
9) <a href="https://nasdaq.com/market-activity/institutional-portfolio/grantham-mayo-van-otterloo--co-llc-698786" target="_blank">Grantham, Mayo, Van Otterloo & Co.</a><br />
<br />
10) <a href="http://nasdaq.com/market-activity/institutional-portfolio/geode-capital-management-llc-396991" target="_blank">Geode Capital Management</a><br />
<br />
11) <a href="http://nasdaq.com/market-activity/institutional-portfolio/goldman-sachs-group-inc-11158" target="_blank">Goldman Sachs Group</a><br />
<br />
12) <a href="http://nasdaq.com/market-activity/institutional-holdings" target="_blank">JP Morgan Chase</a><a href="http://www.nasdaq.com/symbol/jpm/institutional-holdings"> & Co.</a><br />
<br />
13) <a href="http://nasdaq.com/market-activity/institutional-portfolio/morgan-stanley-5929" target="_blank">Morgan Stanley</a><br />
<br />
14) <a href="http://nasdaq.com/market-activity/institutional-portfolio/manulife-asset-management-north-america-ltd-423815" target="_blank">Manulife Asset Management</a><br />
<br />
15) <a href="http://nasdaq.com/market-activity/institutional-portfolio/ubs-global-asset-management-americas-inc-16304" target="_blank">UBS Asset Management</a><br />
<br />
16) <a href="http://nasdaq.com/market-activity/institutional-portfolio/barclays-global-investors-uk-holdings-ltd-97343" target="_blank">Barclays Global Investor</a><br />
<br />
17) <a href="http://nasdaq.com/market-activity/institutional-portfolio/epoch-investment-partners-inc-652677" target="_blank">Epoch Investment Partners</a><br />
<br />
18) <a href="http://nasdaq.com/market-activity/institutional-portfolio/thornburg-investment-management-inc-89338" target="_blank">Thornburg Investment Management</a><br />
<br />
19) <a href="http://nasdaq.com/market-activity/institutional-portfolio/kornitzer-capital-management-inc-ks-37348" target="_blank">Kornitzer Capital Management </a><br />
<br />
20) <a href="http://nasdaq.com/market-activity/institutional-portfolio/batterymarch-financial-management-inc-84505" target="_blank">Batterymarch Financial Management</a><br />
<br />
21) <a href="http://nasdaq.com/market-activity/institutional-portfolio/tocqueville-asset-management-lp-61536" target="_blank">Tocqueville Asset Management</a><br />
<br />
22) <a href="http://nasdaq.com/market-activity/institutional-portfolio/neuberger-berman-group-llc-806551" target="_blank">Neuberger Berman</a><br />
<br />
23) <a href="http://nasdaq.com/market-activity/institutional-portfolio/winslow-capital-management-llc-64122" target="_blank">Winslow Capital Management</a><br />
<br />
24) <a href="http://nasdaq.com/market-activity/institutional-portfolio/herndon-capital-management-667299" target="_blank">Herndon Capital Management</a><br />
<br />
25) <a href="http://nasdaq.com/market-activity/institutional-portfolio/artisan-partners-limited-partnership-810204" target="_blank">Artisan Partners </a><br />
<br />
26) <a href="http://nasdaq.com/market-activity/institutional-portfolio/great-west-life-assurance-co-can-179401" target="_blank">Great West Life Insurance Management</a><br />
<br />
27) <a href="http://nasdaq.com/market-activity/institutional-portfolio/lazard-asset-management-llc-406745" target="_blank">Lazard Asset Management </a><br />
<br />
28) <a href="http://nasdaq.com/market-activity/institutional-portfolio/janus-capital-management-llc-14077" target="_blank">Janus Capital Management </a><br />
<br />
29) <a href="http://nasdaq.com/market-activity/institutional-portfolio/franklin-resources-inc-8481" target="_blank">Franklin Resources</a><br />
<br />
30) <a href="http://nasdaq.com/market-activity/institutional-portfolio/capital-research-global-investors-767200" target="_blank">Capital Research Global Investors</a><br />
<br />
31) <a href="http://nasdaq.com/market-activity/institutional-portfolio/price-t-rowe-associates-inc-md-2145" target="_blank">T. Rowe Price</a> <br />
<br />
32) <a href="http://nasdaq.com/market-activity/institutional-portfolio/first-eagle-investment-management-llc-698776" target="_blank">First Eagle Investment Management</a><br />
<br />
33) <a href="http://nasdaq.com/market-activity/institutional-portfolio/frontier-capital-management-co-llc-394637" target="_blank">Frontier Capital Management</a><br />
<br />
34)<a href="http://nasdaq.com/market-activity/institutional-portfolio/akre-capital-management-llc-75476" target="_blank"> Akre Capital Management</a><br />
<br />
35) <a href="http://nasdaq.com/market-activity/institutional-portfolio/brandywine-global-investment-management-llc-27853" target="_blank">Brandywine Global</a><br />
<br />
36) <a href="http://nasdaq.com/market-activity/institutional-portfolio/brown-capital-management-llc-71549">Brown Capital Management</a><br />
<br />
37) <a href="http://nasdaq.com/market-activity/institutional-portfolio/victory-capital-management-inc-212262" target="_blank">Victory Capital Management</a><br />
<br />
38) <a href="https://nasdaq.com/market-activity/institutional-portfolio/orbis-allan-gray-ltd-994657" target="_blank">Orbis Allan Gray</a></span></span></span></p><p><span data-preserver-spaces="true"><span data-preserver-spaces="true"><span data-preserver-spaces="true">39) <a href="https://www.nasdaq.com/market-activity/institutional-portfolio/ariel-investments-llc-62338" target="_blank">Ariel Investments</a> <br />
<br />
40) <a href="https://nasdaq.com/market-activity/institutional-portfolio/ark-investment-management-llc-909492" target="_blank">ARK Investment Management</a><br />
<br />
<b>Canadian Asset Managers</b><br />
<br />
Here are a few Canadian funds I track closely:<br />
<br />
1) <a href="http://nasdaq.com/market-activity/institutional-portfolio/addenda-capital-inc-899651" target="_blank">Addenda Capital</a><br />
<br />
2) <a href="http://nasdaq.com/market-activity/institutional-portfolio/letko-brosseau--associates-inc-644587" target="_blank">Letko, Brosseau and Associates</a><br />
<br />
3) <a href="http://nasdaq.com/market-activity/institutional-portfolio/fiera-capital-corp-841421" target="_blank">Fiera Capital Corporation</a><br />
<br />
4) <a href="http://nasdaq.com/market-activity/institutional-portfolio/west-face-capital-inc-793057" target="_blank">West Face Capital</a><br />
<br />
5) <a href="http://nasdaq.com/market-activity/institutional-portfolio/hexavest-inc-734583" target="_blank">Hexavest</a><br />
<br />
6) <a href="http://nasdaq.com/market-activity/institutional-portfolio/1832-asset-management-lp-49833" target="_blank">1832 Asset Management</a><br />
<br />
7) <a href="http://nasdaq.com/market-activity/institutional-portfolio/jarislowsky-fraser-ltd-79456" target="_blank">Jarislowsky, Fraser</a><br />
<br />
8) <a href="http://nasdaq.com/market-activity/institutional-portfolio/connor-clark--lunn-investment-management-ltd-934788" target="_blank">Connor, Clark & Lunn Investment Management</a><br />
<br />
9) <a href="http://nasdaq.com/market-activity/institutional-portfolio/td-asset-management-inc-48888" target="_blank">TD Asset Management</a><br />
<br />
10) <a href="http://nasdaq.com/market-activity/institutional-portfolio/cibc-asset-management-inc-48214" target="_blank">CIBC Asset Management</a><br />
<br />
11) <a href="http://nasdaq.com/market-activity/institutional-portfolio/beutel-goodman--co-ltd-710265" target="_blank">Beutel, Goodman & Co</a><br />
<br />
12) <a href="http://nasdaq.com/market-activity/institutional-portfolio/greystone-managed-investments-inc-821111" target="_blank">Greystone Managed Investments</a><br />
<br />
13)<a href="http://nasdaq.com/market-activity/institutional-portfolio/mackenzie-financial-corp-11994" target="_blank"> Mackenzie Financial Corporation</a><br />
<br />
14) <a href="http://nasdaq.com/market-activity/institutional-portfolio/great-west-life-assurance-co-can-179401" target="_blank">Great West Life Assurance Co</a><br />
<br />
15) <a href="http://nasdaq.com/market-activity/institutional-portfolio/guardian-capital-lp-401502" target="_blank">Guardian Capital</a><br />
<br />
16) <a href="http://nasdaq.com/market-activity/institutional-portfolio/scotia-capital-inc-682750" target="_blank">Scotia Capital</a><br />
<br />
17) <a href="http://nasdaq.com/market-activity/institutional-portfolio/agf-investments-inc-97719" target="_blank">AGF Investments</a><br />
<br />
18) <a href="http://nasdaq.com/market-activity/institutional-portfolio/montrusco-bolton-investments-inc-815856" target="_blank">Montrusco Bolton</a><br />
<br />
19) <a href="https://nasdaq.com/market-activity/institutional-portfolio/ci-investments-inc-97939" target="_blank">CI Investments </a><br />
<br />
20) <a href="http://nasdaq.com/market-activity/institutional-portfolio/venator-capital-management-ltd-957973">Venator Capital Management</a><br />
<br />
21) <a href="https://nasdaq.com/market-activity/institutional-portfolio/van-berkom--associates-inc-859033" target="_blank">Van Berkom and Associates</a><br />
<br />
22) <a href="https://nasdaq.com/market-activity/institutional-portfolio/formula-growth-ltd-66643" target="_blank">Formula Growth</a><br />
<br />
23) <a href="https://nasdaq.com/market-activity/institutional-portfolio/hillsdale-investment-management-inc-715974" target="_blank">Hillsdale Investment Management</a><br />
<br />
<b>Pension Funds, Endowment Funds, Sovereign Wealth Funds and the Fed's Swiss Surrogate</b><br />
<br />
Last but not least, I the track activity of some pension funds,
endowment, sovereign wealth funds and the Swiss National Bank (aka the Fed's Swiss surrogate). Below, a
sample of the funds I track closely:<br />
<br />
1) <a href="http://nasdaq.com/market-activity/institutional-portfolio/her-majesty-the-queen-in-right-of-the-province-of-alberta-as-804398" target="_blank">Alberta Investment Management Corporation (AIMco)</a><br />
<br />
2) <a href="http://nasdaq.com/market-activity/institutional-portfolio/ontario-teachers-pension-plan-board-39534" target="_blank">Ontario Teachers' Pension Plan </a><br />
<br />
3) <a href="http://nasdaq.com/market-activity/institutional-portfolio/canada-pension-plan-investment-board-627326" target="_blank">Canada Pension Plan Investment Board</a><br />
<br />
4) <a href="http://nasdaq.com/market-activity/institutional-portfolio/caisse-de-depot-et-placement-du-quebec-68712" target="_blank">Caisse de dépôt et placement du Québec</a><br />
<br />
5) <a href="http://nasdaq.com/market-activity/institutional-portfolio/omers-administration-corp-47058" target="_blank">OMERS Administration Corp.</a></span></span></span></p><p><span data-preserver-spaces="true"><span data-preserver-spaces="true"><span data-preserver-spaces="true">6) <a href="https://www.nasdaq.com/market-activity/institutional-portfolio/healthcare-of-ontario-pension-plan-trust-fund-1109223" target="_blank">Healthcare of Ontario Pension Plan (HOOPP)</a> <br />
<br />
7) <a href="http://nasdaq.com/market-activity/institutional-portfolio/british-columbia-investment-management-corp-403975" target="_blank">British Columbia Investment Management Corporation (BCI)</a><br />
<br />
8) <a href="http://nasdaq.com/market-activity/institutional-portfolio/public-sector-pension-investment-board-748435" target="_blank">Public Sector Pension Investment Board (PSP Investments)</a><br />
<br />
9) <a href="http://nasdaq.com/market-activity/institutional-portfolio/pggm-investments-819140" target="_blank">PGGM Investments</a><br />
<br />
10) <a href="http://nasdaq.com/market-activity/institutional-portfolio/apg-all-pensions-group-nv-778338" target="_blank">APG All Pensions Group</a><br />
<br />
11) <a href="http://nasdaq.com/market-activity/institutional-portfolio/california-public-employees-retirement-system-16324" target="_blank">California Public Employees Retirement System (CalPERS)</a><br />
<br />
12) <a href="http://nasdaq.com/market-activity/institutional-portfolio/california-state-teachers-retirement-system-60377" target="_blank">California State Teachers Retirement System (CalSTRS)</a><br />
<br />
13) <a href="http://nasdaq.com/market-activity/institutional-portfolio/new-york-state-common-retirement-fund-57993" target="_blank">New York State Common Fund</a><br />
<br />
14) <a href="http://nasdaq.com/market-activity/institutional-portfolio/new-york-state-teachers-retirement-system-12810" target="_blank">New York State Teachers Retirement System</a><br />
<br />
15) <a href="http://nasdaq.com/market-activity/institutional-portfolio/state-board-of-administration-of-florida-retirement-system-58515" target="_blank">State Board of Administration of Florida Retirement System</a><br />
<br />
16) <a href="http://nasdaq.com/market-activity/institutional-portfolio/state-of-wisconsin-investment-board-12995" target="_blank">State of Wisconsin Investment Board</a><br />
<br />
17) <a href="http://nasdaq.com/market-activity/institutional-portfolio/state-of-new-jersey-common-pension-fund-a-820822" target="_blank">State of New Jersey Common Pension Fund</a><br />
<br />
18) <a href="http://nasdaq.com/market-activity/institutional-portfolio/public-employees-retirement-system-of-ohio-48200" target="_blank">Public Employees Retirement System of Ohio</a><br />
<br />
19) <a href="http://nasdaq.com/market-activity/institutional-portfolio/strs-ohio-43705" target="_blank">STRS Ohio</a><br />
<br />
20) <a href="http://nasdaq.com/market-activity/institutional-portfolio/teacher-retirement-system-of-texas-66768" target="_blank">Teacher Retirement System of Texas </a><br />
<br />
21) <a href="https://nasdaq.com/market-activity/institutional-portfolio/virginia-retirement-system-48036?page=21" target="_blank">Virginia Retirement Systems</a><br />
<br />
22) <a href="http://nasdaq.com/market-activity/institutional-portfolio/tiaa-cref-investment-management-llc-62790" target="_blank">TIAA CREF investment Management</a><br />
<br />
23) <a href="http://nasdaq.com/market-activity/institutional-portfolio/harvard-management-co-inc-62058" target="_blank">Harvard Management Co.</a><br />
<br />
24) <a href="http://nasdaq.com/market-activity/institutional-portfolio/norges-bank-720003" target="_blank">Norges Bank</a><br />
<br />
25) <a href="http://nasdaq.com/market-activity/institutional-portfolio/nordea-investment-management-ab-396811" target="_blank">Nordea Investment Management</a><br />
<br />
26) <a href="http://nasdaq.com/market-activity/institutional-portfolio/korea-investment-corp-784895" target="_blank">Korea Investment Corp.</a><br />
<br />
27) <a href="http://nasdaq.com/market-activity/institutional-portfolio/temasek-holdings-private-ltd-33497" target="_blank">Singapore Temasek Holdings </a><br />
<br />
28) <a href="http://nasdaq.com/market-activity/institutional-portfolio/yale-university-35203" target="_blank">Yale Endowment Fund </a><br />
<br />
29) <a href="https://www.nasdaq.com/market-activity/institutional-portfolio/swiss-national-bank-913041" target="_blank">Swiss National Bank</a> (aka, the Fed's Swiss surrogate)
<br /></span></span></span>
</p>Below, Jay Woods, Freedom Capital Markets chief global strategist, joins 'Squawk Box' to discuss the key takeaways from the latest 13F filings, latest market trends, and more.<p>
Next, John Kolovos, Macro Risk Advisors chief technical market strategist, joins 'Closing Bell' to discuss why he believes there will be further market correction and his top sector picks.</p><p>
Third, Eric Rosengren, Former Boston Fed president, joins 'Closing Bell Overtime' to talk the FOMC's next move, what's in store for the bond market, the state of the economy and more.</p><p>
Fourth, former US Treasury Secretary Lawrence Summers says that persistent inflationary pressures evident in the latest data suggest that there’s potential for the next Federal Reserve policy move to be to raise interest rates, not lower them. He speaks with David Westin on "Wall Street Week."</p><p>
Lastly, the FDA has just approved a new kind of therapy for a deadly form of skin cancer. It's a treatment using a patient's own cells and it could transform the future of treating advanced tumors. NBC's Anne Thompson reports.
</p><p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/5U9lLlrDCL8?si=SSCduZNxNniRGo05" title="YouTube video player" width="640"></iframe></p><p>
<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/2jZtvtL2Cds?si=E9ceTHhLqR45np66" title="YouTube video player" width="640"></iframe> </p><p>
<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/SEQm51n2lv0?si=k_skO45SvFmAoRJe" title="YouTube video player" width="640"></iframe> </p><p>
<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/U32L4EYTN4o?si=A9dERd74AcjmUW2l" title="YouTube video player" width="640"></iframe> </p><p>
<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/PWJym2gHzzw?si=pPAqMVzTr_IAgxL_" title="YouTube video player" width="640"></iframe> </p><p></p>Leo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.com0tag:blogger.com,1999:blog-5879608286191780679.post-7481137704244949202024-02-15T18:30:00.008-05:002024-02-16T09:41:06.188-05:00OMERS Contributes Far More Than $13.7 Billion Annually to Ontario’s GDP<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi1P_wixHfx3DFNKahjs0O9roE2V2eXR8fQUBMbW7AYUxMzUxtWAtJJdm3HL_29h0DAmoTfXXku9F_DlyPNFI0JRbF4MtjozbSkPVANS1mLthimzOrj8A-JGh-cXOZPc_aAXpOrdmlzoZ35KQefxTlUYo7TzZq-JRwE2P_gLJcd89OYf1l5Q0IWSlrpP0fU/s761/Blake_OMERS%20members.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="300" data-original-width="761" height="158" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi1P_wixHfx3DFNKahjs0O9roE2V2eXR8fQUBMbW7AYUxMzUxtWAtJJdm3HL_29h0DAmoTfXXku9F_DlyPNFI0JRbF4MtjozbSkPVANS1mLthimzOrj8A-JGh-cXOZPc_aAXpOrdmlzoZ35KQefxTlUYo7TzZq-JRwE2P_gLJcd89OYf1l5Q0IWSlrpP0fU/w400-h158/Blake_OMERS%20members.jpg" width="400" /></a></div>OMERS issued a <a href="https://www.omers.com/news/omers-contributes-usd13-7-billion-annually-to-ontarios-gdp?utm_campaign=social_news&utm_source=linkedin&utm_medium=organic&utm_term=cancea#" target="_blank">press release</a> earlier stating it contributes $13.7 billion annually to Ontario’s GDP, supporting 143,000 jobs:<p></p><p></p><blockquote><p>OMERS, the defined benefit pension plan for municipal
sector employees in Ontario, contributes $13.7 billion annually to the
province’s GDP, according to new research conducted by the Canadian
Centre for Economic Analysis (CANCEA). <br />
<br /><b>OMERS released the study
on Pension Awareness Day (February 15) to highlight the importance of
pensions to members, to all Ontarians, and to our province’s economy. </b><br />
<br /><b>“By
delivering on our commitment to our members, OMERS continues to create
economic value in Ontario,” said Jonathan Simmons, OMERS Chief Financial
and Strategy Officer. “OMERS retirees spending their pension payments,
activity from our investments, and the impact of our operations support
more than 143,000 jobs provincewide – up 19% from three years ago.” </b><br />
<br />Based
on a review of 2023 data, OMERS overall contribution to Ontario’s
economy grew by 14% in the past three years. One in 11 households in
Ontario are impacted by OMERS in some way, whether directly through
OMERS membership or its broader impact in the province, according to
CANCEA. <br />
<br />The research highlights that approximately $8.7 billion
of GDP is a direct result of OMERS retirees spending their pension
payments. This spending supports local economies across Ontario and
gives a significant boost to these communities. OMERS investments and
operations in the province contribute an additional $5 billion of GDP. <br />
<br /><b>"We
are focused on delivering on our pension promise to members and their
families,” said Celine Chiovitti, OMERS Chief Pension Officer. “With
changing demographics and an increasing proportion of the population
over the age of 65, access to a pension plan has never been more
critical.”<br /></b>
<b><br />“As a pension plan that pays billions of dollars per
year in stable, secure retirement benefits to our members, our impact
reaches beyond payments to individual members. We are proud OMERS is
positively contributing to hundreds of thousands of households, both
urban and rural, across Ontario.”</b></p><p>A backgrounder including a breakdown of OMERS impact in each region across Ontario is available <a class="link blue underline" data-testid="external-link" href="https://assets.ctfassets.net/iifcbkds7nke/4OWmyYlverqaa8970lW5p7/ae2e75d11b3aa61778d11658c2a77c13/A_summary_of_our_economic_contribution_research__2023.pdf" rel="noopener noreferrer" target="_blank"><span class="link-text">here</span></a>.</p><p>The full CANCEA study can be found <a class="link blue underline" data-testid="external-link" href="https://assets.ctfassets.net/iifcbkds7nke/1wZjEGZZZzbm082PDrAqpw/0690d3fd8617d0b85125c66c179564da/2023_Economic_Contributions_of_OMERS_and_its_Members_in_Ontario.pdf" rel="noopener noreferrer" target="_blank"><span class="link-text">here</span></a>.</p></blockquote><p>Did you catch this part of the press release:</p><p></p><blockquote>Based
on a review of 2023 data, OMERS overall contribution to Ontario’s
economy grew by 14% in the past three years. <b>One in 11 households in
Ontario are impacted by OMERS </b>in some way, whether directly through
OMERS membership or its broader impact in the province, according to
CANCEA. <br />
<br /><b>The research highlights that approximately $8.7 billion
of GDP is a direct result of OMERS retirees spending their pension
payments</b>. This spending supports local economies across Ontario and
gives a significant boost to these communities. OMERS investments and
operations in the province contribute an additional $5 billion of GDP. </blockquote><p></p><p>Now, for those of you who are unaware, OMERS is one of Canada’s largest defined benefit pension plans,
providing public service and other employees in Ontario with a stable
and secure income in retirement. </p><p>For more than 60 years, it has humbly served as the steward and
guardian of the retirement income of more than half a million active,
deferred and retired municipal employees from communities across
Ontario.</p><h4><span id="Withaworld-classteamofinvestorsandprofessionalsacrossofficesinNorthAmerica,Europe,AsiaandAustralia,OMERShasgenerated$127.4billioninnetassets,asatJune30,2023,makingitoneofthelargestdefinedbenefitpensionplansinCanada." style="font-weight: normal;">With
a world-class team of investors and professionals across offices in
North America, Europe, Asia and Australia, OMERS has generated $127.4
billion in net assets, as at June 30, 2023, and it will continue growing strongly for many more years.</span></h4><h4><span id="Withaworld-classteamofinvestorsandprofessionalsacrossofficesinNorthAmerica,Europe,AsiaandAustralia,OMERShasgenerated$127.4billioninnetassets,asatJune30,2023,makingitoneofthelargestdefinedbenefitpensionplansinCanada." style="font-weight: normal;">Led by Huntsville's man, Blake Hutcheson, and a highly qualified team, OMERS is doing its job ensuring that retired and active members working at police and fire stations as well as paramedics and other important public sector jobs can rest assured their retirement security is in good hands.</span></h4><h4><span id="Withaworld-classteamofinvestorsandprofessionalsacrossofficesinNorthAmerica,Europe,AsiaandAustralia,OMERShasgenerated$127.4billioninnetassets,asatJune30,2023,makingitoneofthelargestdefinedbenefitpensionplansinCanada." style="font-weight: normal;">As the press release states, today is Pension Awareness Day in Ontario and OMERS joins OTPP, HOOPP, OPTrust, IMCO, CAAT Pension Plan and UPP in raising awareness on how important pensions are to the overall economy.</span></h4><h4><span id="Withaworld-classteamofinvestorsandprofessionalsacrossofficesinNorthAmerica,Europe,AsiaandAustralia,OMERShasgenerated$127.4billioninnetassets,asatJune30,2023,makingitoneofthelargestdefinedbenefitpensionplansinCanada." style="font-weight: normal;"><b>Of course, every day is Pension Awareness Day here at Pension Pulse</b>, I am providing a service to Canadians at large who want to understand where and how our large well-known pension funds (or pension plans in some cases) are investing.</span></h4><h4><span id="Withaworld-classteamofinvestorsandprofessionalsacrossofficesinNorthAmerica,Europe,AsiaandAustralia,OMERShasgenerated$127.4billioninnetassets,asatJune30,2023,makingitoneofthelargestdefinedbenefitpensionplansinCanada." style="font-weight: normal;">But I do think it's important to take a step back and look at the bigger picture as to why pensions matter and why we need to do a better job covering Canadians in the private sector who are falling through the cracks, anxious about outliving their savings during retirement. </span></h4><h4><span id="Withaworld-classteamofinvestorsandprofessionalsacrossofficesinNorthAmerica,Europe,AsiaandAustralia,OMERShasgenerated$127.4billioninnetassets,asatJune30,2023,makingitoneofthelargestdefinedbenefitpensionplansinCanada." style="font-weight: normal;">On Monday, I discussed why it may be time to <a href="http://pensionpulse.blogspot.com/2024/02/time-to-expand-cpp-again-during-age-of.html" target="_blank">expand the CPP again during the age of uncertainty</a>, covering the thoughts of </span><span style="font-weight: normal;">former Bank of Canada Governor now Special Advisor at Osler, Hoskin & Harcourt Stephen Poloz.</span></h4><h4><span id="Withaworld-classteamofinvestorsandprofessionalsacrossofficesinNorthAmerica,Europe,AsiaandAustralia,OMERShasgenerated$127.4billioninnetassets,asatJune30,2023,makingitoneofthelargestdefinedbenefitpensionplansinCanada." style="font-weight: normal;">Some actuaries on LinkedIn and privately disagreed with me stating there is a cost and risk born by Canadian contributors when we expand the CPP.</span></h4><h4><span id="Withaworld-classteamofinvestorsandprofessionalsacrossofficesinNorthAmerica,Europe,AsiaandAustralia,OMERShasgenerated$127.4billioninnetassets,asatJune30,2023,makingitoneofthelargestdefinedbenefitpensionplansinCanada." style="font-weight: normal;">My answer to them -- and remember, I'm coming at this from a right-of-center economic viewpoint -- is <b>there is a much bigger cost to society if we maintain the status quo which will only ensure more pension poverty down the road</b>.</span></h4><h4><span id="Withaworld-classteamofinvestorsandprofessionalsacrossofficesinNorthAmerica,Europe,AsiaandAustralia,OMERShasgenerated$127.4billioninnetassets,asatJune30,2023,makingitoneofthelargestdefinedbenefitpensionplansinCanada." style="font-weight: normal;">Don't get me wrong, these are smart actuaries and while I understand the points they're making, they fail to recognize the bigger risk at hand if we do not bolster Canada's retirement system and cover more people adequately in the private sector.</span></h4><h4><span id="Withaworld-classteamofinvestorsandprofessionalsacrossofficesinNorthAmerica,Europe,AsiaandAustralia,OMERShasgenerated$127.4billioninnetassets,asatJune30,2023,makingitoneofthelargestdefinedbenefitpensionplansinCanada." style="font-weight: normal;">And no, more financial literacy isn't the answer, <b>expanding the CPP is the answer</b>.</span></h4><h4><span id="Withaworld-classteamofinvestorsandprofessionalsacrossofficesinNorthAmerica,Europe,AsiaandAustralia,OMERShasgenerated$127.4billioninnetassets,asatJune30,2023,makingitoneofthelargestdefinedbenefitpensionplansinCanada." style="font-weight: normal;">I trade every day and probably know more about markets than the best CIOs out there <b>and I'm telling you these are brutal and dangerous markets</b>.</span></h4><h4><span id="Withaworld-classteamofinvestorsandprofessionalsacrossofficesinNorthAmerica,Europe,AsiaandAustralia,OMERShasgenerated$127.4billioninnetassets,asatJune30,2023,makingitoneofthelargestdefinedbenefitpensionplansinCanada." style="font-weight: normal;">It may not seem like that as the <a href="https://finance.yahoo.com/news/stock-market-today-sp-500-hits-fresh-record-as-stocks-recover-from-cpi-rout-210624336.html" target="_blank">S&P hits a fresh record high</a> but you will understand when it hits the fan and it won't be pretty.</span></h4><h4><span id="Withaworld-classteamofinvestorsandprofessionalsacrossofficesinNorthAmerica,Europe,AsiaandAustralia,OMERShasgenerated$127.4billioninnetassets,asatJune30,2023,makingitoneofthelargestdefinedbenefitpensionplansinCanada." style="font-weight: normal;"><p></p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">S&P 500 is the most concentrated it’s been in 50 years and is approaching an all-time high. This is fine right? <a href="https://t.co/17sGoSfLRn">pic.twitter.com/17sGoSfLRn</a></p>— Barchart (@Barchart) <a href="https://twitter.com/Barchart/status/1757941004802351124?ref_src=twsrc%5Etfw">February 15, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script> <p>Anyways, tomorrow I'll cover markets and take a sneak peek into the portfolios of the world's most powerful money managers and then tell you why you should ignore what they bought and sold last quarter.</p><p></p></span></h4><h4><span id="Withaworld-classteamofinvestorsandprofessionalsacrossofficesinNorthAmerica,Europe,AsiaandAustralia,OMERShasgenerated$127.4billioninnetassets,asatJune30,2023,makingitoneofthelargestdefinedbenefitpensionplansinCanada." style="font-weight: normal;">Before I forget, earlier today, OMERS' new Chief Pension Officer, Celine Chiovitti, <a href="https://www.linkedin.com/pulse/rethinking-retirement-pension-awareness-day-celine-chiovitti-kehhc%3FtrackingId=SgtUGIpiLBizWHHaW5GvuQ%253D%253D/?trackingId=SgtUGIpiLBizWHHaW5GvuQ%3D%3D" target="_blank">posted her thoughts</a> on LinkedIn on r</span><span style="font-weight: normal;"><span data-scaffold-immersive-reader-title="">ethinking “retirement” on Pension Awareness Day:</span> <br /></span></h4><div class="reader-article-content reader-article-content--content-blocks" dir="ltr">
<p class="ember-view reader-content-blocks__paragraph" id="ember6522"></p><blockquote><p class="ember-view reader-content-blocks__paragraph" id="ember6522">
Today marks the second annual Pension Awareness Day, which
presents us with the opportunity to reflect on what “retirement” means
today and into the future.
</p>
<p class="ember-view reader-content-blocks__paragraph" id="ember6523">
<b>With changing demographics and an increasing proportion of the
population over the age of 65, access to a pension plan has never been
more critical. Today, retirement looks different: we are living longer,
and for many, retirement no longer means completely withdrawing from
work. Instead, many are transitioning into flexible or part-time work,
dedicating themselves to their community through volunteering or finding
meaning and perhaps a small business opportunity in their hobbies.<span class="white-space-pre"> </span><a class="app-aware-link" data-test-app-aware-link="" href="https://www.linkedin.com/company/omers/">OMERS</a><span class="white-space-pre"> </span>continues
to modernize to serve our members wherever they are in their pension
journey – from hire to retire and throughout retirement.
</b></p>
<p class="ember-view reader-content-blocks__paragraph" id="ember6524">
<b>No matter how Canadians spend this chapter of their lives, they
deserve access to meaningful income in retirement. Our mission at OMERS
is to deliver a sustainable, affordable and meaningful plan to our
600,000+ members. In 2022, OMERS paid out $5.9 billion in pension
benefits to 194,000 retired members.
</b> </p>
<p class="ember-view reader-content-blocks__paragraph" id="ember6525">
As a leader in the pension industry in Canada, OMERS recognizes
our responsibility to raise awareness about the value of having a secure
and stable income in retirement, both for the benefit of our members
and all Canadians. <b>The value of a defined benefit pension plan goes
beyond the cheque; many OMERS members have personally told me how their
pension benefits have positively contributed to their lives and
well-being. The effects also extend to their employers and communities,
and more broadly to local, provincial and national economic and social
well-being. In this regard, pensions can be considered “social
infrastructure,” which is critical to ensuring our society remains
vibrant, caring and productive.
</b></p>
<p class="ember-view reader-content-blocks__paragraph" id="ember6526">
This is supported by the economic and social value research conducted for OMERS by the<span class="white-space-pre"> </span><a class="app-aware-link" data-test-app-aware-link="" href="https://www.linkedin.com/company/canadian-centre-for-economic-analysis/">Canadian Centre for Economic Analysis</a><span class="white-space-pre"> </span>(CANCEA),
with findings released this week which show that OMERS activities
contribute approximately $13.7 billion to Ontario’s GDP annually. <b>More
than one in 11 households in Ontario are impacted by OMERS in some way,
whether through membership or indirectly through the economic impact of
our investments, operations and pension payments</b>. OMERS investments and
operations in Ontario, along with retirees spending their pension
income, support more than 143,000 jobs provincewide. These findings
underscore the substantial economic value OMERS provides to communities
across the province, including significant contributions in central and
northern Ontario.
</p>
<p class="ember-view reader-content-blocks__paragraph" id="ember6527">
To better understand the relationship between a secure and stable
retirement income and Canadians' health and well-being in retirement,
OMERS sponsored research last year, “<a class="app-aware-link" data-test-app-aware-link="" href="https://www.niageing.ca/retirement-income" target="_self">Healthy
Outcomes: Understanding the Impact of Adequate, Stable and Secure
Retirement Income on the Ability of Canadians to Age Well and in the
Right Place</a>,” by the<span class="white-space-pre"> </span><a class="app-aware-link" data-test-app-aware-link="" href="https://www.linkedin.com/company/national-institute-on-ageing/">National Institute on Ageing</a><span class="white-space-pre"> </span>(NIA), a think tank at<span class="white-space-pre"> </span><a class="app-aware-link" data-test-app-aware-link="" href="https://www.linkedin.com/school/torontometropolitanuniversity/">Toronto Metropolitan University</a><span class="white-space-pre"> </span>focused on the realities of Canada’s aging population.
</p>
<p class="ember-view reader-content-blocks__paragraph" id="ember6528">
<b>The report reviewed the impact that financial security (both
before and in retirement) has on the physical and mental health of
Canadians, and found that there is a relationship between eligibility
for pension coverage and better health outcomes. For working-age adults,
income volatility can result in greater stress, which impacts health
and well-being, and for older adults, sudden drops in their monthly or
annual income could be detrimental if their income cannot cover the
entire time spent in retirement, or if emergencies require financial
resources. The study found that economic security and income stability
play a role in reducing anxiety and stress.
</b></p>
<p class="ember-view reader-content-blocks__paragraph" id="ember6529">
Both the Healthy Outcomes report and the economic and social value
research provide insight into the positive impacts of a secure and
stable retirement income on the individual and their community. For the
pension plan member, it is a financial value that also provides a better
sense of life satisfaction, financial security, higher satisfaction
with health, community involvement and lower stress. <b>For employers, a
pension plan, particularly a defined benefit plan, is a valuable
retention tool, especially when competition for talent is so strong. And
for communities, there is a higher likelihood for voluntarism, a high
propensity for charitable donations and less reliance on government
financial support when residents have a secure and stable source of
retirement income.
</b> </p>
<p class="ember-view reader-content-blocks__paragraph" id="ember6530">
The Canadian pension system acts as a cushion to reduce income
instability in retirement, protecting older adults with a minimum income
floor. Demonstrating the value of a defined benefit pension plan is
important to ensure broad understanding and support for pension plans.
</p>
<p class="ember-view reader-content-blocks__paragraph" id="ember6531">
<b>With an aging population and a blurring line between full-time
work and retirement, we need to start thinking differently about what
retirement means and how a defined benefit pension plan like OMERS can
be part of the solution</b>.
</p></blockquote><p class="ember-view reader-content-blocks__paragraph" id="ember6531"></p>
</div><h4><span style="font-weight: normal;"><span data-scaffold-immersive-reader-title="">Very well said and let me congratulate </span></span><span id="Withaworld-classteamofinvestorsandprofessionalsacrossofficesinNorthAmerica,Europe,AsiaandAustralia,OMERShasgenerated$127.4billioninnetassets,asatJune30,2023,makingitoneofthelargestdefinedbenefitpensionplansinCanada." style="font-weight: normal;">Celine Chiovitti publicly for her well-deserved nomination, taking care of OMERS' most important assets, their 600,000+ members.</span></h4><h4><span id="Withaworld-classteamofinvestorsandprofessionalsacrossofficesinNorthAmerica,Europe,AsiaandAustralia,OMERShasgenerated$127.4billioninnetassets,asatJune30,2023,makingitoneofthelargestdefinedbenefitpensionplansinCanada." style="font-weight: normal;">If you ask me, OMERS </span><span style="font-weight: normal;">contributes far more than $13.7 billion annually to Ontario’s GDP.</span><span id="Withaworld-classteamofinvestorsandprofessionalsacrossofficesinNorthAmerica,Europe,AsiaandAustralia,OMERShasgenerated$127.4billioninnetassets,asatJune30,2023,makingitoneofthelargestdefinedbenefitpensionplansinCanada." style="font-weight: normal;"> </span></h4><h4><span id="Withaworld-classteamofinvestorsandprofessionalsacrossofficesinNorthAmerica,Europe,AsiaandAustralia,OMERShasgenerated$127.4billioninnetassets,asatJune30,2023,makingitoneofthelargestdefinedbenefitpensionplansinCanada.">No matter where you live in Canada, learn more about the importance of pensions in your province and communities.</span></h4><h4><span id="Withaworld-classteamofinvestorsandprofessionalsacrossofficesinNorthAmerica,Europe,AsiaandAustralia,OMERShasgenerated$127.4billioninnetassets,asatJune30,2023,makingitoneofthelargestdefinedbenefitpensionplansinCanada." style="font-weight: normal;">And lastly, it's important that you all note, the publisher of Pension Pulse has no pension or income whatsoever, and lives with the constant stress of having to eat what he kills.</span></h4><h4><span id="Withaworld-classteamofinvestorsandprofessionalsacrossofficesinNorthAmerica,Europe,AsiaandAustralia,OMERShasgenerated$127.4billioninnetassets,asatJune30,2023,makingitoneofthelargestdefinedbenefitpensionplansinCanada." style="font-weight: normal;">Fortunately, I'm very good at what I do but I'm also very cognizant that luck plays a role and a reversal of fortune can occur at any time.</span><span id="Withaworld-classteamofinvestorsandprofessionalsacrossofficesinNorthAmerica,Europe,AsiaandAustralia,OMERShasgenerated$127.4billioninnetassets,asatJune30,2023,makingitoneofthelargestdefinedbenefitpensionplansinCanada." style="font-weight: normal;"> <br /></span></h4><h4><span id="Withaworld-classteamofinvestorsandprofessionalsacrossofficesinNorthAmerica,Europe,AsiaandAustralia,OMERShasgenerated$127.4billioninnetassets,asatJune30,2023,makingitoneofthelargestdefinedbenefitpensionplansinCanada." style="font-weight: normal;">When I tell you markets are dangerous right now, I know what I'm talking about because I live it every day before publishing my blog, I spend all day analyzing markets from A to Z (and helping my wife take care of a newborn but she does most of the heavy lifting there as my back problems have reemerged and I need a second back surgery to do fusion, argh!!). <br /></span></h4><h4><span id="Withaworld-classteamofinvestorsandprofessionalsacrossofficesinNorthAmerica,Europe,AsiaandAustralia,OMERShasgenerated$127.4billioninnetassets,asatJune30,2023,makingitoneofthelargestdefinedbenefitpensionplansinCanada." style="font-weight: normal;">This is why it's more important than ever to cover Canadians properly during their retirement years.</span></h4><h4><span id="Withaworld-classteamofinvestorsandprofessionalsacrossofficesinNorthAmerica,Europe,AsiaandAustralia,OMERShasgenerated$127.4billioninnetassets,asatJune30,2023,makingitoneofthelargestdefinedbenefitpensionplansinCanada." style="font-weight: normal;">The more Canadians we cover under a well-governed, well diversified defined-benefit plan, the better off the country will be (and again, I'm a right-of-center conservative guy stating this).</span></h4><h4><span id="Withaworld-classteamofinvestorsandprofessionalsacrossofficesinNorthAmerica,Europe,AsiaandAustralia,OMERShasgenerated$127.4billioninnetassets,asatJune30,2023,makingitoneofthelargestdefinedbenefitpensionplansinCanada." style="font-weight: normal;">Lastly, on this </span><span style="font-weight: normal;">second annual Pension Awareness Day, I appreciate all of you who take the time to donate to this blog and support my efforts, it's greatly appreciated (top left-hand side under my picture).</span></h4><h4><span style="font-weight: normal;">Below, an older interview with OMERS' CEO Blake Hutcheson which I really like, Listen to this exchange with Goldy Hyder, it's excellent.</span></h4><p>And the Ontario Business Lifetime Achievement Award is given to a leader who demonstrates outstanding leadership throughout their career and has made a significant and positive impact on the province and beyond. </p><p>This year’s award recipient is Blake Hutcheson, President and CEO of OMERS. Take the time to watch the interview below and learn more about Huntville's man.</p><p>And since OMERS recently acquired a 5% indirect stake in Maple Leaf Sports and Blake is a huge Leafs fan (Auston Matthews is awesome), a recap of the last game vs the Blues where <span class="style-scope ytd-text-inline-expander" id="snippet-text"><span class="yt-core-attributed-string yt-core-attributed-string--white-space-pre-wrap" role="text"><span class="yt-core-attributed-string--link-inherit-color" style="color: #131313;">rookie Bobby McMann had a breakout night recording his first career hat trick to lead the Leafs past the St. Louis Blues 4-1. </span></span></span><span class="style-scope ytd-text-inline-expander" id="snippet-text"><span class="yt-core-attributed-string yt-core-attributed-string--white-space-pre-wrap" role="text"><span class="yt-core-attributed-string--link-inherit-color" style="color: #131313;">Go Leafs Go! </span></span></span></p><p><span class="style-scope ytd-text-inline-expander" id="snippet-text"><span class="yt-core-attributed-string yt-core-attributed-string--white-space-pre-wrap" role="text"><span class="yt-core-attributed-string--link-inherit-color" style="color: #131313;">Wait a minute, <b>GO HABS GO!!!</b> (Slaf and rest of team are finally playing awesome hockey).<br /></span></span></span></p><p>
<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/H-WmZiWGm8I?si=y-sxC8dCgRM_A9Z9" title="YouTube video player" width="640"></iframe></p><p> <iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="340" src="https://www.youtube.com/embed/C4VwAK6U6jg?si=cTb-lR6jLmTcVw7U" title="YouTube video player" width="640"></iframe> </p><p>
<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/DbOjKrvFzZI?si=_suC6InPfJKaGsrG" title="YouTube video player" width="640"></iframe> </p><p></p>Leo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.com0tag:blogger.com,1999:blog-5879608286191780679.post-51625025803056936492024-02-14T18:04:00.005-05:002024-02-15T12:42:12.919-05:00CDPQ Acquires Majority Stake in Japan's Inuyama Solar Project<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj0K43jkyEH15YdBRfBs3YPW-C24dhTrzfx09VizELgOt1S78_2I1dunADdjh8kFRHri2LJvxykPsQ7TKVA2FOSENd_tMtpPTmr4nQCFd_N_j0M2cpXEXtuz1iJYEhVz1rnR0KPmeB29cCU3EjBmCKBsvzAp0zMma8N_SzCdaYeVEnIPcwD9MQvwL7qwl-c/s2800/Emmanuel%20Jaclot-Shizen%20Eenrgy%20directors.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1867" data-original-width="2800" height="266" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj0K43jkyEH15YdBRfBs3YPW-C24dhTrzfx09VizELgOt1S78_2I1dunADdjh8kFRHri2LJvxykPsQ7TKVA2FOSENd_tMtpPTmr4nQCFd_N_j0M2cpXEXtuz1iJYEhVz1rnR0KPmeB29cCU3EjBmCKBsvzAp0zMma8N_SzCdaYeVEnIPcwD9MQvwL7qwl-c/w400-h266/Emmanuel%20Jaclot-Shizen%20Eenrgy%20directors.jpg" width="400" /></a></div>Earlier today, CDPQ issued a <a href="https://www.cdpq.com/en/news/pressreleases/cdpq-acquires-80-stake-solar-plant-japan" target="_blank">press release</a> stating it has<span class="field field--name-title field--type-string field--label-hidden"> acquired an 80% stake in a solar plant in Japan:</span><p></p><div class="paragraph paragraph-reskin paragraph__1col-text-v2 extra-padding--bottom border-transparent">
<div class="pt__content p__content content-small">
<div class="pt__text">
<p></p></div></div></div><blockquote><div class="paragraph paragraph-reskin paragraph__1col-text-v2 extra-padding--bottom border-transparent"><div class="pt__content p__content content-small"><div class="pt__text"><p>CDPQ, a global investment group, today announced it has
acquired an 80% stake in a solar power generation plant in Japan,
alongside its portfolio company Shizen Energy Inc. (Shizen Energy).</p><p>The
Inuyama project, which went into operation in the last few days, has a
total solar power generation capacity of 31 MW, enough to power the
equivalent of 7,850 homes. The solar power plant is located in Aichi
prefecture.</p><p><b>This acquisition marks CDPQ’s first co-investment with
Japan’s Shizen Energy as part of a JPY 50 billion (CAD 460 million)
co-investment framework announced in October 2022, when CDPQ invested
JPY 20 billion (CAD 186 million) in the company to support its growth.
Both partners are currently exploring further co investment
opportunities within the framework of this agreement.</b></p><blockquote class="blockquote--leftborder"><p><b><i>Emmanuel Jaclot, CDPQ’s Executive Vice-President and Head of Infrastructure, said: </i>“Japan plays
a decisive role in the decarbonization of Asia</b> and, as an experienced
investor in renewable energy, we are delighted to join forces with our
portfolio company Shizen Energy <b>for this first joint investment in a
solar plant.</b> This transaction represents a further step in our
partnership as we continue to explore more co-investment opportunities
in the energy transition space.”</p></blockquote><blockquote class="blockquote--leftborder"><p><i><b>Oliver Senter, Executive Officer of Shizen Energy responsible for Investment & Finance, said:</b></i>
“We are delighted to announce a first co-investment project between
CDPQ and Shizen. <b>Inuyama is an ideal project for co-investment given
that it was developed, built and will be operated by Shizen Energy
throughout its lifetime</b>. We have a pipeline of around 3 GW of renewable
energy projects in Japan, which we hope to deliver in the next three to
five years.”</p></blockquote>
</div>
</div>
</div>
<h3 class="title-inter-sm">About CDPQ</h3>
<p>At CDPQ, we invest constructively to generate sustainable returns
over the long term. As a global investment group managing funds for
public pension and insurance plans, we work alongside our partners to
build enterprises that drive performance and progress. We are active in
the major financial markets, private equity, infrastructure, real estate
and private debt. As at June 30, 2023, CDPQ’s net assets totalled CAD 424 billion. For more information, visit <a href="https://www.cdpq.com/en">cdpq.com</a>, consult our <a href="https://www.linkedin.com/company/cdpq" rel="noopener noreferrer" target="_blank">LinkedIn</a> or <a href="https://www.instagram.com/lacdpq/" rel="noopener noreferrer" target="_blank">Instagram</a> pages, or follow us on <a href="https://twitter.com/LaCDPQ" rel="noopener noreferrer" target="_blank">X</a>.<span class="field field--name-title field--type-string field--label-hidden"> </span></p></blockquote><p><span class="field field--name-title field--type-string field--label-hidden">In October 2022, I covered why </span><a href="http://pensionpulse.blogspot.com/2022/10/cdpq-partners-with-shizen-energy-to.html" target="_blank">CDPQ invested ¥20B in Shizen Energy</a>, its first direct infrastructure investment in Japan.</p><p><span class="field field--name-title field--type-string field--label-hidden">Now, just to give you an idea of how impressive this young company is, a year after receiving this commitment from CDPQ, it <a href="https://www.theasset.com/article-esg/50202/shizen-energy-inks-20-year-vppa-with-microsoft" target="_blank">signed a 20-year virtual power purchase agreement</a> (VPPA) with Microsoft to provide renewable energy from a solar farm in Inuyama City, Aichi Prefecture. </span></p><p><span class="field field--name-title field--type-string field--label-hidden">This deal represented Microsoft's first PPA in Japan and was a major accomplishment for </span>Shizen Energy.</p><p>And now CDPQ is getting in on the action taking an 80% stake in the
Inuyama project.</p><p><span class="field field--name-title field--type-string field--label-hidden">With a partner like Shizen Energy signing 20-year VPPA with Microsoft, it's a no-brainer (those 20-year deals help pay long dated liabilities).</span></p><p><span class="field field--name-title field--type-string field--label-hidden">In related news, yesterday </span><span class="field field--name-title field--type-string field--label-hidden">CDPQ <a href="https://www.cdpq.com/en/news/pressreleases/cdpq-invests-125-million-accelerate-levios-growth" target="_blank">announced an investment</a> of $125 million to accelerate Levio’s growth: <br /></span></p><div class="paragraph paragraph-reskin paragraph__1col-text-v2 extra-padding--bottom border-transparent">
<div class="pt__content p__content content-small">
<div class="pt__text">
<p></p></div></div></div><blockquote><div class="paragraph paragraph-reskin paragraph__1col-text-v2 extra-padding--bottom border-transparent"><div class="pt__content p__content content-small"><div class="pt__text"><p>CDPQ today announced an investment of CAD 125 million
to support the acquisition strategy of Levio, a leading consulting firm
that leverages its expertise to achieve digital transformations,
tailoring new technologies to ever-changing business realities.</p><p>Founded
in 2014 and now present in five countries, the company specializes in
supporting institutional and corporate clients when planning, managing
and executing large-scale digital transformation programs.</p><blockquote class="blockquote--leftborder"><p><b>“CDPQ
is proud to partner with Levio to support its expansion plan, which
will grow its North American presence and consolidate its position in
the market. Digital transformation is central to the sustainability and
productivity of organizations, and this partnership is perfectly in line
with our investment priorities and supports the company’s growth,” <i>said</i> <i>Kim Thomassin, Executive Vice-President and Head of Québec at</i> <i>CDPQ.</i></b></p></blockquote><blockquote class="blockquote--leftborder"><p><b>“Today
marks Levio’s first decade of operations. In addition to contributing
significant value creation for our clients, these ten years have been
characterized by strong, organic growth, complemented by strategic
acquisitions which together, represented a compound annual growth rate
of more than 40% over the past five years,” <i>said</i> <i>François Dion, President and Founder of</i> <i>Levio.</i>
“With the arrival of CDPQ as a partner, we are looking to increase our
rate of expansion to achieve our company acquisition strategy by
associating with successful entrepreneurs, primarily in Canada and the
U.S. This agreement provides us with significant financial leverage to
continue building partnerships with our clients to execute large-scale
digital transformations.”</b></p></blockquote><p>In a context where new
technologies enable evolving organization’s business models, <b>Levio
shares the risk of project execution with its clients</b> and commits to
delivering the expected solutions and benefits.</p><p>With a dozen
acquisitions under its belt, Levio is a disciplined buyer that has
demonstrated its integration capabilities through an approach that aims
to develop new skills.</p><p>The company is currently entering a new
expansion phase, primarily in North America, with a view to increasing
its geographic footprint, further strengthening its value-added
offering, and developing new business practices.</p><p>Levio currently has nearly 2,000 consultants working in 12 offices in Canada, the United States, Morocco, India and France.</p><p>As part of this transaction, Desjardins Capital Markets acted as Levio’s exclusive financial advisor.</p>
</div>
</div>
</div>
<div class="paragraph paragraph--type--press-release-about paragraph--view-mode--default">
<div class="container">
<section class="component-text">
<h3 class="title-inter-sm">ABOUT LEVIO</h3>
<p>Levio is a digital native consulting firm providing services
covering all aspects of digital transformation, from business strategies
to information technologies (IT), to organizational management,
including cybersecurity, data valorization, artificial intelligence and
cloud computing. Since its creation in 2014, Levio has grown by leaps
and bounds, and was listed on America’s Fastest-Growing Companies 2021
for its sustainable growth. Moreover, for a second year in a row, Levio
ranks among the top 25 Best Places to Work in Canada according
to Glassdoor.</p><p>The firm specializes in supporting its institutional
and corporate clients when implementing digital transformation programs
or mega-projects. For close to 10 years, Levio has built its reputation
on an outstanding team of consultants who deliver substantial solutions
benefiting from new technologies to help its clients gain efficiency
and profitability.</p><p>Learn more about Levio at <a href="https://www.levioconsulting.com/" rel="noopener noreferrer" target="_blank">levioconsulting.com</a>.</p></section></div></div></blockquote><p>This part of the press release caught my attention:</p><p></p><blockquote>In a context where new
technologies enable evolving organization’s business models, Levio
shares the risk of project execution with its clients and commits to
delivering the expected solutions and benefits.</blockquote><p></p><p><span class="field field--name-title field--type-string field--label-hidden">Not many companies do this and with this $125 million commitment by CDPQ, the company will expand its presence</span> primarily in North America, "with a view to increasing
its geographic footprint, further strengthening its value-added
offering, and developing new business practices."</p><p>Lastly, it is worth noting that <span class="field field--name-title field--type-string field--label-hidden">Charles Emond’s mandate as President and Chief Executive Officer of CDPQ <a href="https://www.cdpq.com/en/news/pressreleases/charles-emonds-mandate-president-chief-executive-officer-cdpq-renewed" target="_blank">was renewed last week</a>:</span></p><div class="paragraph paragraph-reskin paragraph__1col-text-v2 extra-padding--bottom border-transparent">
<div class="pt__content p__content content-small">
<div class="pt__text">
<p></p><blockquote><p>Caisse de dépôt et placement du Québec (CDPQ) today
announced that <b>Charles Emond’s mandate has been renewed for a five-year
period concluding on February 6, 2029</b>. This appointment by the CDPQ
Board of Directors was approved today by the Government of Québec
pursuant to the organization’s incorporating act.</p><blockquote class="blockquote--leftborder"><p><b>“Over
the past four years, under Charles Emond’s leadership, CDPQ has
delivered solid results in an atypical environment marked by unusual
market conditions. In this context, and supported by his team, he
introduced key strategic changes to the CDPQ portfolio to generate
results that meet depositors’ needs and create value added. At the same
time, CDPQ significantly grew its assets in Québec and mobilized its
teams around several structuring projects in real estate and
infrastructure,” <i>said Jean St-Gelais, Chairman of CDPQ’s Board of Directors.</i>
“CDPQ will have to continue to navigate a complex context as it
executes its mission in the coming years. As such, and in light of
Charles Emond’s remarkable performance in recent years, the Board of
Directors has decided to renew his mandate now,” <i>he</i> <i>added.</i></b></p></blockquote><blockquote class="blockquote--leftborder"><p><b>“We’re
facing tremendous challenges. The global environment has been volatile
and uncertain since 2020—and that will continue. To achieve our
ambitious objectives and keep striving to serve our depositors better in
these back-to-back extremes, we must continue to evolve as an
organization,” <i>stated Charles Emond, President and Chief Executive Officer of CDPQ.</i>
“We’re privileged to work for an institution whose unique
signature—constructive capital—is a great calling card that opens doors
to the best partners and best opportunities around the world. CDPQ is
also the pension fund most present in its local economy globally. I
would like to thank the Board for their trust and I’m extremely proud to
start this new chapter with the Executive Committee and all our teams.”</b></p></blockquote><p>Mr. Emond’s second mandate is effective today.</p></blockquote><p></p>
</div>
</div>
</div><p></p><p><span class="field field--name-title field--type-string field--label-hidden">Now, I would have been shocked if Charles Emond's mandate wasn't renewed over the next five years because he's doing a great job at the helm of this organization and it's not an easy job (probably one of the most stressful jobs among Maple Eight CEOs because CDPQ has a dual mandate and is always under the microscope).</span></p><p><span class="field field--name-title field--type-string field--label-hidden">There's a political dimension to the job and that part always worries me but thankfully Mr. Legault took the Board's advice and renewed Charles' mandate (you never know with these politicians).</span></p><p>Some more food for thought for my pension readers.<br /></p><p><span class="field field--name-title field--type-string field--label-hidden">If CDPQ's Board wasn't satisfied with Charles, they wouldn't have renewed his contract for another five years and the same goes for all CEOs at these large Canadian pension funds. </span></p><p><span class="field field--name-title field--type-string field--label-hidden">They are never fired openly; rather their contract isn't renewed for whatever reason and they depart the organization.</span></p><p><span class="field field--name-title field--type-string field--label-hidden">That's the way it works at these large shops (but some CEOs who experienced this are obviously more sensitive than others). <br /></span></p><p><span class="field field--name-title field--type-string field--label-hidden">Alright, let me wrap it up there. <br /></span></p><p><span class="field field--name-title field--type-string field--label-hidden">Below, Shinzen Energy's purpose is to "take action for the blue planet". They therefore provide every service to accelerate and co-create a 100% renewable-powered planet.</span></p><p><span class="field field--name-title field--type-string field--label-hidden"><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/ihXYVjiX5dw?si=9OUNZPOHFsCSurqh" title="YouTube video player" width="640"></iframe></span></p><p></p>Leo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.com0tag:blogger.com,1999:blog-5879608286191780679.post-66022693149437010392024-02-13T18:22:00.007-05:002024-02-14T18:20:07.714-05:00AIMCo Opens New York Office to Expand Private Credit<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjX3w4zWuLN6gtCZK9h16KIbyOI0LxB28HNkAi5ctJIcWizS3ZzAJSVJ5Q2Vgc7VWka6X4jKjhZcaY3CRwrW2vc49IkuKhtLn8xbYFAxO-Kb0idW0rjEBJXE7XuIQM02Z6L4zhsUSQOeef6b8U_zIuvxKFWjpjTcD7VAG6CJBQbi7ygWncfNWfRXnWvz_Ng/s2000/NYC_Opening.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1334" data-original-width="2000" height="266" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjX3w4zWuLN6gtCZK9h16KIbyOI0LxB28HNkAi5ctJIcWizS3ZzAJSVJ5Q2Vgc7VWka6X4jKjhZcaY3CRwrW2vc49IkuKhtLn8xbYFAxO-Kb0idW0rjEBJXE7XuIQM02Z6L4zhsUSQOeef6b8U_zIuvxKFWjpjTcD7VAG6CJBQbi7ygWncfNWfRXnWvz_Ng/w400-h266/NYC_Opening.jpg" width="400" /></a></div>Allison McNeely and Paula Sambo of Bloomberg <a href="https://financialpost.com/fp-finance/aimco-opens-new-york-office-credit-push" target="_blank">report</a> AIMCo opens New York office in credit push:<p></p><p></p><blockquote><p>Alberta Investment Management Corp., one of Canada’s largest pension plans, is opening a New York office as it pushes further into private credit investing.</p><p>The $164-billion pension is looking to grow its $6 billion of private
credit assets by a couple of billion dollars over the next five years,
chief investment officer Marlene Puffer said. Meanwhile, it’s opening a
New York office to be close to many of its biggest U.S. managers.</p><p><b>“We’re getting much more strategic about relationships with general partners,” she said.</b></p><p><b>AIMCo
is already active in middle-market private credit. It will focus on
expanding its investments in large-cap private credit based in the U.S.,
aiming to do co-investments alongside fund commitments, Puffer said.</b></p><p></p><p><b>AIMCo’s
office at One Vanderbilt, near Grand Central Terminal, is opening with
five professionals focused on private credit and one on private equity,
with plans to grow to around 25 to 30 people in the next five years, she
said.</b></p><p></p><p><b>The Alberta pension plan hired David Scudellari in 2023 as head of international investment. </b><br /></p><p>Private credit has grown into a US$1.7-trillion asset class as higher
interest rates have drawn investors and bank financing for deals has
dried up.</p><p></p><p>AIMCo invests on behalf of 15 pension, endowment and government clients in the oil-rich Canadian province.</p></blockquote><p></p><p>Earlier today, AIMCo issued a press release stating a US presence expands investment<br /></p><p><b></b></p><blockquote><p><b>New York/Edmonton</b> – The Alberta Investment Management
Corporation (AIMCo) today announced that it has further expanded its
global footprint by opening an office in New York. </p><p><b>“Our physical
presence in important financial markets like New York greatly enhances
how we source, evaluate, and ultimately execute on investments to
further diversify our asset mix for the clients we serve,” said Evan
Siddall, Chief Executive Officer, AIMCo. “We have a significant client
mandate to grow our private credit portfolio, and having a team based in
Manhattan will also help us accelerate our efforts in this key asset
class.”</b></p><p>AIMCo’s New York office brings the firm’s total number of global
offices to seven, including Edmonton, Calgary, Toronto, London,
Luxembourg, and Singapore. The office in Singapore was opened in the
fall of 2023. The organization’s presence in these countries provides
access to deeper pools of talent that bring nuanced country- and
sector-specific knowledge to secure the best investment opportunities. </p><p><b>“Our
New York office, in the heart of one of the world’s most important
financial hubs, will also provide us with the presence and proximity
required to both develop and deepen critical relationships with our
investment partners,” said David Scudellari, Senior Executive Managing
Director, Head of International Investment, based in AIMCo’s New York
office. “These relationships are a critical element of successfully
executing on our investment strategy.”</b></p><h3>About AIMCo</h3><p>AIMCo
is one of Canada’s largest and most diversified institutional investment
managers with more than C$164 billion of assets under management. AIMCo
invests globally on behalf of pension, endowment, insurance, and
government funds in the Province of Alberta. AIMCo manages approximately
30 pools of capital on behalf of these clients. With offices in
Edmonton, Calgary, Toronto, London, Luxembourg, New York, and Singapore,
our more than 200 investment professionals bring deep expertise in a
range of sectors, geographies, and industries.</p></blockquote><p></p><p>Alright, so AIMCo is opening up a New York office to expand its private credit operations.</p><p>If you look at <a href="https://2022.annualreports.aimco.ca/?_ga=2.254238600.1418940885.1707862093-123760145.1707170233" target="_blank">AIMCo's 2022 Annual Report</a>, you will see the performance benchmarks for all asset classes:</p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiELKqRM2ZNgE8pRSVu8R3nNjGvgpudyFnN6YRl-O26CeuOwSAmEBkFDmIf7CigU9Kjnzrwf4zqpTkK98Dzuo1m8Hamxbzvi5q7hrjDj537RQMfS5XGH2tsbjHOskIoxR_4b36eslzK068UkTQbrHPoeGCzazB8rSJ2lwX64Bc-FJUsT8B299w5wGkilFed/s887/AIMCo-Perf%20benchmarks.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="887" data-original-width="883" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiELKqRM2ZNgE8pRSVu8R3nNjGvgpudyFnN6YRl-O26CeuOwSAmEBkFDmIf7CigU9Kjnzrwf4zqpTkK98Dzuo1m8Hamxbzvi5q7hrjDj537RQMfS5XGH2tsbjHOskIoxR_4b36eslzK068UkTQbrHPoeGCzazB8rSJ2lwX64Bc-FJUsT8B299w5wGkilFed/w638-h640/AIMCo-Perf%20benchmarks.jpg" width="638" /></a></div><p></p><p>In Private Debt (Credit) it's 40% S&P/LSTA Leveraged Loan Index + 40% S&P European Leveraged Loan Index + 0.90% (CAD hedged)'</p><p>According to the annual report:</p><p></p><blockquote>The portfolio generated a 6.2% net return for the year 2022, outperforming the benchmark by 6.3%. The return was driven by a diversified, resilient portfolio consisting of primarily senior secured, floating rate loans that sit at the top of the capital structure and benefit from a rising or high interest rate environment. </blockquote><p></p><blockquote>The Private Debt & Loan team remains focused on credit selection, portfolio diversification and a partnership approach to deliver stable, attractive risk-adjusted returns throughout a cycle. <br /></blockquote><p></p><p>I'm not sure exactly how much exposure AIMCo has to Private Debt but I reckon it's less than 3% (data isn't available in their annual report).</p><p>And they want to grow it to 5% or more of total portfolio (that's my thinking).<br /></p><p>Now, recall AIMCo CEO Evan Siddall recently <a href="http://pensionpulse.blogspot.com/2024/01/aimco-ceo-evan-siddall-on-shadow-banks.html" target="_blank">wrote a comment</a> stating ‘shadow banks’ aren’t a problem for the financial system, they are the solution.</p><p>I shared this on the rise of private credit:</p><p></p><blockquote><p>Now, I'm much more comfortable with large, sophisticated pension
funds investing in Blackstone, Apollo and other large funds because they
have the long investment horizon and sophistication to understand the
risks involved.</p><p>Again, we have not had a serious recession in a while and if that happens, private credit will be battle tested.</p><p>That's why Pimco is taking a contrarian bet here. </p><p>And this is why I'm reticent to recommend private credit at large to investors.</p><p>If
you're going to invest in the space, make sure you go with someone
experienced like Antares Capital (see recent comment where Andrew
Edgell,Senior Managing Director & Global Head of Credit
Investments at CPP Investments <a href="https://pensionpulse.blogspot.com/2024/01/cpp-investments-andrew-edgell-on.html" target="_blank">talked about</a> how he sees private debt faring in
the credit cycle ahead).</p><p></p><p>The way I see it, the problem
isn't with the top funds in the space, it's with new entrants, including
big banks, which I call the Johnny-come-lately funds who take a lot
more risks to make bigger returns.</p><p>That's a disaster in the making and it will reverberate across the industry.</p></blockquote><p></p><p>So let me be clear, I'm not worried about Apollo, Ares, Blackstone, Brookfield, KKR and other experienced funds who are underwriting their loans very conservatively. I'm a lot more worried about newer funds and even banks which are now entering the space and taking risks they shouldn't be taking <b>at this point of the cycle</b>.</p><p>And yes, I am still very worried about a hard landing and how this will test the asset class:</p><p></p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">Everyone is now betting on a soft landing<br /><br />Remind me, how many times has consensus been correct? <a href="https://t.co/hav0SRhdw7">pic.twitter.com/hav0SRhdw7</a></p>— Game of Trades (@GameofTrades_) <a href="https://twitter.com/GameofTrades_/status/1757483528168816994?ref_src=twsrc%5Etfw">February 13, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script> <p></p><p>The Bloomberg article quotes AIMCo CIO Marlene Puffer as saying the Fund is already active in middle-market private credit and it will focus on
expanding its investments in large-cap private credit based in the US,
aiming to do co-investments alongside fund commitments.</p><p>To do this properly they need to build on their strategic relationships and the person in charge of this is David Scudellari, Senior Executive Managing
Director, Head of International Investment<b> </b>(featured above standing at Evan's left side)<b>.</b> </p><p>Recall David came to AIMCo from PSP Investments where he was in charge of building up their private debt portfolio, the second best private debt portfolio in Canada right behind CPP Investments.</p><p>So David is a veteran who understands the game well and he will leverage those strategic relationships with key funds to do more co-investments in large-cap private credit, paying no fees and expanding the asset class at AIMCo.</p><p>David is also an American who originally came to Canada from New York City so now he's going back home.</p><p>If you're wondering why Canada's large pension funds open offices in strategic cities like London, New York, Singapore and other places, it's to have boots on the ground developing and leveraging off key relationships and to provide flexibility to attract top talent.</p><p>AIMCo does this well and it has to do this well because it's hard attracting talent to Edmonton or Calgary, they need to be flexible and have their best employees working all over the world.</p><p>The same goes for all of Canada's Maple Eight. Flexibility is the key.</p><p>Below, Marlene Puffer, chief investment officer at AIMCo, <a href="https://www.bnnbloomberg.ca/investing/video/most-of-our-fixed-income-investment-is-in-the-canadian-market-aimco-s-cio~2799500" target="_blank">joins</a> BNN Bloomberg
to talk about investment landscape, and how the institutional investor
navigates economic backdrop.</p><p>Marlene discusses the push in private credit in a higher for longer environment and why they're expanding their presence in the US. </p><p><iframe allow="autoplay; clipboard-write; encrypted-media; picture-in-picture" allowfullscreen="" frameborder="0" height="360" src="https://embed.jasperplayer.com?brand=BNN&destination=bnn_web&language=EN&contentId=2799500" width="640"></iframe></p><p></p>Leo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.com0tag:blogger.com,1999:blog-5879608286191780679.post-41169333181579809382024-02-12T19:46:00.008-05:002024-02-13T09:08:25.089-05:00Time to Expand the CPP Again During the Age of Uncertainty? <p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-OmAU6PBcC7FHAZZT3dozvHGpsATiqwkPOnT7Z7GUVlkkGdmauLxeoXNdp61fBNWFVdQ5Wt_HKWVfTNqE0WvRo-600droUSe2UlTmbqfSV4Kk_d3GHmcsptfzGaNsJIdyOQFBG8KA1FkeZIiWKrCKLyq07XbCAm7UkdamkL-elRDbsPROsPyv549UwnVd/s450/Stephen%20Poloz.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="434" data-original-width="450" height="386" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-OmAU6PBcC7FHAZZT3dozvHGpsATiqwkPOnT7Z7GUVlkkGdmauLxeoXNdp61fBNWFVdQ5Wt_HKWVfTNqE0WvRo-600droUSe2UlTmbqfSV4Kk_d3GHmcsptfzGaNsJIdyOQFBG8KA1FkeZIiWKrCKLyq07XbCAm7UkdamkL-elRDbsPROsPyv549UwnVd/w400-h386/Stephen%20Poloz.jpg" width="400" /></a></div>Claude Lavoie wrote a an <a href="https://www.theglobeandmail.com/business/commentary/article-we-can-all-have-federal-workers-gold-plated-pensions-just-expand-the/" target="_blank">op-ed for the Globe and Mail</a> stating we can all have federal workers’ ‘gold-plated’ pensions – just expand the CPP:<p></p><p class="c-article-body__text text-pr-5"></p><blockquote><p class="c-article-body__text text-pr-5">Many
people rage at (and envy) the “gold-plated” retirement plan for federal
employees. Common complaints are that it’s unfair and overly generous
in comparison with their own plans. But perhaps they should be asking
why their plans are not as generous as the public sector’s.</p></blockquote><blockquote><p class="c-article-body__text text-pr-5"> <b>The CPP currently replaces
33 per cent of average lifetime income (up to a maximum), which is well
below the estimated 60 per cent to 70 per cent necessary to maintain a
similar standard of living in retirement. While some lower-income
workers can reach this threshold through the accumulation of Old Age
Security, Guaranteed Income Supplement and CPP benefits, the vast
majority of workers must count on their ability and financial knowledge
to invest adequately. About <a href="https://www150.statcan.gc.ca/n1/daily-quotidien/230623/t002b-eng.htm">75 per cent of private-sector workers</a> do not have an employer-sponsored pension plan and, according to a study by <a href="https://www2.deloitte.com/ca/en/pages/press-releases/articles/deloitte-canada-report-shows-the-canadian-financial-services-ecosystem-must-work-together-to-narrow-the-retirement-gap.html">Deloitte</a>, about 55 per cent of near-retiree households are at risk of a significant drop in their standard of living.</b></p><p class="c-article-body__text text-pr-5">Increasing
the generosity of the CPP would ensure that every Canadian saves enough
and receives a good pension at retirement. It would also bring a
plethora of additional benefits to every worker, even those who have
managed to save sufficiently.</p><p class="c-article-body__text text-pr-5"><b>Workers
bear all the financial risks of their retirement funds, except for the
few (mainly civil servants) with a defined-benefit pension plan. This
includes the risk of outliving their retirement savings or seeing the
value of their retirement funds drop abruptly because of market
corrections. An expansion of the CPP would transfer these risks from
individual workers to the government, which is much better placed to
manage them, as it can pool risks across all Canadian workers and across
generations of workers.</b></p><p class="c-article-body__text text-pr-5"><b>An
expansion of the CPP would shelter retirement savings from high
management fees associated with many private retirement savings
vehicles. The CPP is also fully portable, making it easier to change
jobs. And a higher amount of assets in the hands of the CPP Investment
Board (CPPIB) could allow more investment in the Canadian economy</b>.</p><p class="c-article-body__text text-pr-5"><b>There are obviously some costs – some perceived and some real – associated with expanding the CPP.</b></p><p class="c-article-body__text text-pr-5"><b>Increasing
the generosity of the CPP would require higher contributions from
employees and employers so the system remains fully funded</b>. Employers
not currently contributing enough to their employees’ pensions will
argue that these higher contributions will kill jobs. However, the
recent CPP expansion shows that these fears are overblown. Employer
contributions have <a href="https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/payroll-deductions-contributions/canada-pension-plan-cpp/cpp-contribution-rates-maximums-exemptions.html#h_1" target="_blank">increased 20 per cent</a>
since 2019, yet employment has performed very well during that time if
you discount the pandemic. Note that CPP premiums were also hiked 70 per
cent between 1997 and 2003, yet the employment rate rose strongly. The
economic impact is small because employer contributions are a small part
of the overall compensation to employees and increases in contributions
are gradually offset through market forces by other elements of the
compensation package, including wages. And workers seem to be okay with
this: Almost 70 per cent of respondents to a recent <a href="https://hoopp.com/home/pension-advocacy/research/canadian-retirement-survey-2022#:~:text=66%25%20of%20Canadians%20would%20rather,pension%20(or%20worse%20pension).">survey</a> said they would take a better pension over higher wages.</p><p class="c-article-body__text text-pr-5"><b>It’s
true that workers will have less disposable income during their working
years so they can enjoy a better standard of living in retirement. This
could be problematic for some lower-income households but could be
addressed through complementary measures such as increases in the Canada
Worker Benefit, for example</b>.</p><p class="c-article-body__text text-pr-5">Expanding
the CPP would also expose a greater proportion of Canadian retirement
savings to the risk of poor investment decisions by the CPPIB. We saw
this with the Caisse de dépôt et placement du Québec and its handling of
Quebec Pension Plans funds <a href="https://www.theglobeandmail.com/report-on-business/economy/economic-insight/a-decade-later-shock-of-caisses-abcp-debacle-still-lingers/article36083791/">in the early 2000s</a>.
However, this could be easily managed with strong governance standards
and the potential creation of a few different investment entities, each
responsible for a share of CPP assets and each separated by information
walls. At the same time, the CPPIB has a solid track record, delivering
an average return of almost <a href="https://www.cppinvestments.com/the-fund/" target="_blank">10 per cent</a> over the past decade, and its sound governance and performance have been internationally recognized.</p><p class="c-article-body__text text-pr-5">A secure, generous, fully indexed, defined-benefit pension for all
Canadians is not a pipe dream. It’s a highly feasible possibility. Could
we shift the discussion from Alberta’s (pretty bad) idea to leave the
CPP to a more serious discussion about expanding the system? Since we
need most of the provinces on board and a few decades for everybody to
reap the full benefits, we should start this discussion now.</p><p class="c-article-body__text text-pr-5"><i>Claude Lavoie was
director-general of economic studies and policy analysis at the
Department of Finance from 2008 to 2023. He has represented Canada at
OECD meetings and has received many honours, including the Queen’s
Diamond Jubilee Medal.</i></p></blockquote><p class="c-article-body__text text-pr-5">I read this article last week and generally agree with it minus the nonsense about how expanding
the CPP would also expose a greater proportion of Canadian retirement
savings to the risk of poor investment decisions by the CPPIB. </p><p class="c-article-body__text text-pr-5">The governance at all of Canada's Maple Eight pension funds is a hundred times better than it was back in the great financial crisis (GFC) and that includes CDPQ.</p><p class="c-article-body__text text-pr-5">As far as CPP Investments, in my expert opinion, it still has the best governance of all the major Canadian pension funds, PSP Investments coming a close second (and I use all elements of governance, especially transparency).</p><p class="c-article-body__text text-pr-5">But I agree with Claude Lavoie that we need to further expand the CPP or create another entity modeled after it to allow all Canadians working across the public and private sector to enjoy the benefits that come with a defined-benefit plan.</p><p class="c-article-body__text text-pr-5">It's the right thing to do for retirement security and for the Canadian economy as a whole because as more people retire in dignity and security, they can spend more and governments can collect more taxes.</p><p class="c-article-body__text text-pr-5">And again, this isn't socialism, this is good pension policy and doing what's right for the broad population.</p><p class="c-article-body__text text-pr-5">TFSAs, RRSPs and every other savings vehicle doesn't compare to a well governed DB plan.</p><p class="c-article-body__text text-pr-5">Interestingly, some of the country's most respected voices are also opining about retirement security.</p><p class="c-article-body__text text-pr-5">Recall back in November, HOOPP which has long been an advocate of retirement security in Canada discussed a paper written by former Bank of Canada Governor now Special Advisor at Osler, Hoskin & Harcourt Stephen Poloz on <a href="https://hoopp.com/home/pension-advocacy/research/pensions-in-the-next-age-of-uncertainty-stephen-poloz" target="_blank">Pensions in the Age of Uncertainty</a> which was written for HOOPP:</p>
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<h3></h3><blockquote><h3>Executive summary</h3>
<p>Life consists of childhood, education, work, and retirement. Ensuring
it all goes well financially requires saving during work to provide
adequate income for retirement. It is very hard for a typical household
to guess how much to save during their working
years, since they can only guess how long they will live, what
cumulative income they will earn, or what investment returns they can
count on.</p>
<p>I will argue below that these uncertainties will continue to rise in
the years ahead, laying a heavy risk burden on a majority of Canadians.
People will respond to rising risk by carrying larger financial cushions
during their working lives and continuing
to do so through retirement. Rising macroeconomic uncertainty will
therefore mean a lower path for household spending, slower economic
growth, and lower government tax revenues, relative to the past.</p>
<p><b>A more efficient, more prosperous, and more societally desirable path
is possible – a path where a more robust pension system helps people
manage their rising retirement risk. If income, investment and even
longevity risks continue to rise through
time, then the societal value of stronger pension coverage will also
rise through time. In other words, all sides of the equation – whether
individuals, companies, or governments – will be increasingly willing to
pay for pension coverage.
The more individuals so covered, the higher will be our consumption
spending path and our overall economic growth rate. Government tax
revenues will track higher, too, a fact often lost in the conversation
about Canada’s pension system.</b></p>
<p>In this paper I will elaborate on these arguments, and will conclude
with a discussion of the steps governments might take to encourage more
pension coverage for Canadians.</p>
<h3 style="padding-top: 25px;">Pensions in Canada</h3>
<p><b>Pension coverage in Canada has been relatively steady at around 40% of workers for nearly 50 years.</b><sup>1</sup> Within
that figure, private sector coverage has been falling, most recently to
around 24%, while public sector coverage has been rising,
to around 90%. There has been a gradual shift away from defined
benefit (DB) plans in favour of defined contribution (DC) plans,
especially in the private sector, as companies have attempted to
mitigate rising investment risk, essentially by shifting
those risks back onto their employees.</p>
<p><b>The other 60% of Canadians rely on a government-sponsored
registered retirement savings plan system, which allows them to divert
pre-tax income to their retirement years, up to a maximum percentage.
Over 20% of Canadians participate in this arrangement.
This channel of retirement savings of course is affected by the
same rising trend in investment risk that has led many DB plan employers
to switch to DC plans.</b></p>
<p>After that, the Canada Pension Plan (and the companion Quebec
Pension Plan), mandated and managed by governments, stand as the final
retirement financial backstop. This plan puts a floor under retiree
living standards, but a modest one.</p>
<p><b>And then there is the true Canadian nest egg, the family home.
Canadians own something like $6 trillion in real estate, against which
there is approximately $2 trillion in mortgages outstanding</b>. <b>To put this
in context, net household wealth in real
estate of about $4 trillion is about double the size of Canada’s
total economy</b>. Of course, that wealth is very unequally distributed
among individuals. But people who manage to pay off their mortgage
during their working lives are sitting
on a significant pension plan and many behave accordingly.</p>
<p><b>About two-thirds of Canadian adults own their home, and according
to the Healthcare of Ontario Pension Plan’s (HOOPP) latest Canadian
Retirement Survey, about one third of those households are planning to
sell their home to help fund retirement</b>.<sup>2</sup> This
can involve more than one path: they can downsize when the nest
is empty, sell and become renters or enter a multi-generational living
arrangement, or simply use a reverse mortgage or a simple home equity
line of credit to tap into the equity
stored in the family home. Even so, rising income and interest
rate volatility are working to erode this end-of-life flexibility.
First, home ownership accessibility is clearly declining. The tax
exemption of capital gains on the primary residence
makes it significantly easier for homeowners to save for
retirement as opposed to renters, and this avenue is becoming less open
as housing prices rise. Second, interest rate volatility and the implied
volatility of home valuations are making
this retirement backstop far less reliable than in the past.</p>
<p>To sum up, not much has happened in Canada’s retirement space for
a long time, and it is not because a majority of Canadians already
enjoy a high level of lifetime income security.</p>
<h3 style="padding-top: 10px;">Retirement risks are rising…</h3>
<p>Many Canadians are feeling less secure about their future. For
the first time since Confederation, many Canadian adults fear that their
children will be less well off than they are.</p>
<p>These concerns have many drivers, including Canada’s relatively
poor productivity performance and the perceived impact of the global
energy transition on our resource-based economy. <b>But these concerns are
also founded on the rising trend in
economic and financial volatility we have been experiencing,
which is not unique to Canada</b>. A major source of adverse volatility was
the so-called Third Industrial Revolution, which saw the proliferation
of the computer chip and the wave of globalization
that it enabled. People lost their jobs in the process. As
occurred during the First (steam engine) and Second (electricity)
Industrial Revolutions, spreading deployment of the computer chip led to
falling prices in many parts of the economy;
central banks kept interest rates “low for long”; financial
imbalances grew, and the Global Financial Crisis of 2008 was thrust upon
us. In the background, the level of productivity in major economies
rose significantly – by
at least 10 percentage points during 1995-2005 in the US, for
example. Also, consumer purchasing power rose as globalization and
rising productivity pushed the prices of many ordinary goods lower. This
is how the benefits of technology and globalization
were shared beyond the inventors and deployers of computers.
However, the path followed has been anything but easy, and not everyone
has benefited equally.</p>
<p>An era of mediocre economic progress followed the Global
Financial Crisis. Recessions were followed by jobless recoveries. Wall
Street was bailed out, while Main Street paid the bill, and since that
time the world seems to have stumbled from one difficult
situation to another, never seeing clear skies ahead. If the
global pandemic of 2020 was seen as the worst things could possibly get,
people were to be disappointed, for the post-pandemic world has been
punctuated by other kinds of outbreak: a
surge in inflation, aggressive interest rate hikes, an emergent
cold war with China, an actual shooting war with Russia, a spate of bank
failures.</p>
<p>Some would say that we have had a run of bad luck and are due for
some good luck. But what if this is not all bad luck, but the product
of identifiable forces acting beneath the surface of the global economy?
Forces that are very slow-moving and yet
incredibly powerful, but rarely figure into economists’
forecasting models? And what if these forces are all likely to continue
growing in strength during the next 10-20 years? That would mean we are
facing a rising trend in economic and
financial volatility, and what we have been experiencing is not
just a blip or a run of bad luck, but something destined to continue,
and something we should prepare ourselves for.</p>
<p><b>This is the proposition I lay out in my book, <i>The Next Age of Uncertainty</i>.<sup>3</sup> I
identify five tectonic forces that are shaping our future: population
aging, technological progress, growing inequality, rising debt, and
climate
change, and consider their implications for the future.</b></p>
<p>Population aging is producing a major retirement wave, a shortage
of workers and falling productivity. Digitization of business and
emergent artificial intelligence – the so-called Fourth Industrial
Revolution – are expected to disrupt
20-30% of all jobs while boosting productivity substantially.
Some 70% of global citizens have lived through a deterioration in income
inequality during the past ten years, a trend that can be ascribed to
the Third Industrial Revolution, and the
rapid pace of technological change implies that this will only
worsen in the next 10-20 years as the Fourth Industrial Revolution
unfolds. Debt has exploded everywhere, and now that interest rates have
moved higher, every shock to the economy
is magnified as it interacts with debt. And climate change? A
theoretical concept measured in fractions of a degree spread over 3-4
generations has suddenly become real, with raging forest fires and
growing water stress. A forced transition to
net-zero carbon emissions is one consequence, but the path
society will take toward that goal remains highly uncertain and will
cause significant structural change in the economy.</p>
<p><b>Each of these tectonic forces can disrupt our future all on its
own. But it is the potential interactions between them that raises the
most concern, because they can magnify one another in unpredictable
chain reactions. There is a branch of mathematics
that analyzes the interactions between nonlinear processes like
these, called chaos theory. The name says it all. The economic and
financial episodes that can emerge from this complex combination of
forces are the equivalent of earthquakes –
we all know that the earth’s tectonic forces bear the potential
of a major seismic event, “a big one”, but we never know when it will
actually occur</b>.</p>
<p><b>I conclude that our future will be more volatile in general,
verging on the unforecastable. Rather than one recession/recovery cycle
every decade or so, there may be three. Job losses will become more
frequent, usually for shorter intervals, but there
will be an ongoing tug-of-war between a growing shortage of
workers and a major labor-saving technological wave.</b> <b>Lifetime cumulative
income will become far less certain for individuals. There will be
bigger and more frequent interest rate and
financial market fluctuations, a very challenging environment
for investors and, by extension, for those saving for retirement. In
short, retirement risk is on the rise.</b></p>
<h3 style="padding-top: 10px;">…Creating a growing role for pensions</h3>
<p>A majority of Canadians probably believe that governments will
somehow protect them from this predicted rising tide of risk, as they
did during the COVID-19 pandemic. However, a massive amount of
government fiscal capacity was expended during 2020-23.
Globally, governments are more indebted today than they were at
the end of World War II, and there are few signs that they are
attempting to rebuild that capacity. Indeed, in many countries, the
stock of government debt continues to grow despite
the full recovery of economies from the pandemic.</p>
<p>Back in 1945-64, a major surge in global population (the Post-War
Baby Boom) offered the prospect of a growing base of taxpayers to pay
down the wartime government debt. This could not be less true today. The
global population is aging rapidly as
the baby-boomers work their way through their life cycle. The
fiscal drag from the health care needs of this generation will grow for
the next 10-20 years. In this respect, we should note in particular the
growing incidence of dementia among the
baby boom generation, which is even more costly than most other
late-life diseases. Further, the peace dividend that the world has been
enjoying since the fall of the Berlin Wall has evaporated in the
post-pandemic period. Most governments will
find it necessary to increase public spending on military
readiness, not to mention cyber defence and terrorism.</p>
<p><b>Therefore, I am skeptical that governments will be capable of
protecting citizens from rising economic and financial risk, if only
because their fiscal capacity is so limited. On top of this, governments
are finding it increasingly difficult to get
things done except in the midst of a crisis, even when there are
no financial costs involved. Politics has simply become too hard to do,
proposed policies have all become too contentious and polarizing,
regardless of how well thought out they
may be. At the root of this polarization is rising income
inequality, and the unfolding Fourth Industrial Revolution suggests that
this trend will continue to worsen in the years ahead.</b></p>
<p>At a minimum, the basic mathematics of government finances
suggest that governments will need to focus on developing new policies
that are essentially self-financing – either by raising taxes
specifically to pay for a policy shift (say, a special
tax to finance increased military spending), or by focusing on
policies that enable economic growth to rise and thereby generate more
tax revenues automatically. An example of the latter would be to
streamline project permitting processes so that
less productivity evaporates while major investment decisions
are delayed. A recent policy success was the development of a low-cost
childcare program, which has allowed many young parents to join the
workforce and expand Canada’s economic
potential while generating new tax revenues.</p>
<p>In light of these constraints on governments, I expect that
rising economic volatility and risk will land directly on the doorsteps
of companies and households. This is where most of the adaptation to a
riskier world will happen, with the two parties
often working together with a shared objective. Given our
demographic outlook, companies will be working in a world that is
relatively short of workers. This is in sharp contrast to the past 50
years, where the world had a surplus of workers coming
from the baby boom of post-World War II. Companies will be
looking for ways to improve the lives of their employees, beyond just
raising wages. I think of this as investing in the “S” of “ESG”.</p>
<p><b>If a firm places extra value on an employee, then it will be in
the best interests of the firm to help address any angst that the
employee is feeling. Today, this angst appears to be coming from high
levels of volatility in the economy – more
recessions, more periods of unemployment, inflation volatility,
large fluctuations in interest rates and financial markets, and so on.
As a precursor to this predicted shift in company behaviour, consider
the current debates around working from
home versus being present in the office, which are clearly
falling toward employees; consider also the sudden increase in work
stoppages and strikes in the wake of the global inflation shock of
2022-23.</b></p>
<p><b>This brings us to pensions. The pension concept has nearly
unlimited potential as a tool to manage rising retirement risk. If
Canadians are worried about their future – wondering what their
cumulative lifetime income will be, how much they must
save for retirement, what their investment returns will be, what
their family home will be worth – then a well-structured and reliable
pension would be just the ticket to reassure people and allow them to go
about their lives with confidence.
In this sense, a solid pension acts like an automatic stabilizer
of the economy, allowing people to forge ahead when a shock throws the
economy off course and can be a direct substitute for many government
income stabilization programs.</b></p>
<p>Naturally, the idea is mostly simple arithmetic – in theory, any
citizen can develop a life plan with sufficient savings in the front
half to support them in the second half. There are financial products
that help them to do this. And if their
employer wished to help their employees with this top concern in
life, they could do so by contributing some of the costs involved.
Indeed, many employees appear willing to accept less take-home pay in
exchange for more retirement security.<sup>4</sup> This
is entirely rational given the uncertainties involved, and the
value of such an arrangement is rising as uncertainty rises. And yet,
the level of pension coverage in Canada has remained static for many
years.</p>
<p><b>Individuals who must manage their own investment risk on their
pool of savings, and also must manage their own longevity risk, will
save too much, almost by definition. In other words, they will die with
leftover savings. In the next age of uncertainty,
they will save even more, carrying larger financial buffers and
dying with a rising trend in leftover savings. Saving too much is the
same as spending too little; this implies a less satisfactory life
overall, less dignity in retirement, and raises
the odds of a stagnant economy as our population ages.</b></p>
<p><b>Some have argued that population aging over the next 20-30 years
will lead to a major shift from saving to consumption spending, and even
prove to be inflationary. This might be true for individuals who have
certainty about the future, including the
future value of the stock of savings they have accumulated, and
the length of time that those savings need to support. Individuals
cannot possibly internalize their longevity risk, except by over-saving
or by pushing their retirement date, and
investment risks will rise along with employment risk through
time. With some 60% of Canada’s population dealing with all these risks
by themselves, I believe the balance of risks tilts in the direction of a
lackluster, potentially deflationary
track for the economy as our population ages.</b></p>
<p>Of course, rising macroeconomic risk needs to land somewhere. If a
much larger share of the population were to be covered by a DB pension
plan, households would operate with much more certainty, they would
probably stop saving altogether (beyond the
demands of their pension plan), and the economy would have a
much stronger growth trajectory. But who would be managing the risks
that enabled all this? Almost certainly not individual firms,
particularly since some 80% of Canada’s total
employment is at small and medium-sized enterprises that
undoubtedly believe they could never come to grips with the costs and
risks involved in providing a pension with defined benefits.</p>
<h3 style="padding-top: 10px;">The benefits of retirement risk pooling</h3>
<p>Firms and individuals alike will willingly pay for protection
from risk, and the rising tide of risk we can expect in the future will
make them willing to pay more and more. This line of reasoning points
strongly toward a natural renaissance of the
DB pension plan in the years ahead, or at least something with a
majority of those characteristics. A DB pension protects the
beneficiary from unexpected inflation, from financial market volatility
(investment risk), from longevity risk (outliving
one’s savings), as well as from the risk of prematurely losing
one’s breadwinning partner.</p>
<p><b>The macroeconomic benefits of such a risk reduction are obvious.
People who are not worried about the future live better, spend more and
create more economic growth than a worried economy. That same economic
growth generates company and government
tax revenues and reduces the need for other stabilization
policies from governments. In other words, risk mitigation can, in large
part, pay for itself, viewed through a macroeconomic lens.</b></p>
<p><b>Of course, a DB plan manages all these risks by shifting them to
the employer. Historically, this has often proved to be too much for an
individual employer. For example, the steady decline of interest rates
for much of the past 40 years caused an
explosion of DB pension liabilities as implied discount rates
fell. No less important is the growing longevity of individuals. Plans
parameterized around lifespans of 75 years can be blown up as people
live to 80 or 90. Moreover, some 80% of Canadians
are either self-employed or work for small or medium-sized
businesses, for which sponsoring a DB plan is simply out of reach.</b></p>
<p>These shortcomings of DB plans are fundamentally market failures.
In a perfect capital market, those shortcomings would not arise. Risks
can be minimized through pooling, making pension provision a business
that benefits tremendously from scale. Clearly,
imperfections in the marketplace are somehow preventing the
appropriate agglomerations that would create a stable and
self-sustaining system.</p>
<p><b>Often this brings the conversation around to strengthening the
government-provided pension system (Canada Pension Plan, Quebec Pension
Plan). A significant increase in the benefit levels of that system,
which is what might be needed to manage the
risks that we face going forward, would almost certainly
flounder given the fiscal and political stresses we face already. Such
conversations inevitably ignore the macroeconomic benefits, not to
mention the mental health benefits, of reduced lifetime
income risk. The discussions of the future of the Canada Pension
Plan back in 2018-19 appeared to take no account of the potential for
higher economic growth and therefore higher government tax revenues that
might result from increased retirement
security. The extremely gradual pension plan enhancement
eventually agreed upon was the product of negotiations around how much
the plan would cost, and how much employee and firm contributions would
need to rise, rather than these wider macroeconomic
and fiscal benefits.
</b></p>
<p><b>This suggests that the clearest avenue forward is for government
to promote more pooling of pension schemes in the private sector. The
biggest risk faced by an individual is longevity risk. Even if life
expectancy is easy to track and to predict at
the aggregate level, for an individual it is nearly impossible.
Entering a pool with a large number of other individuals essentially
eliminates this longevity risk, making pooling extremely helpful on
these grounds alone. These benefits accrue
not only to individuals, but of course to their employers, who
may be very reluctant to sponsor a pension plan based on longevity risk
alone. Even firms with 100-200 employees could be highly exposed to this
risk; firms of 50 or fewer employees
prohibitively so.
</b></p>
<p>Pension pooling also creates scale that reduces average fixed
costs associated with fund management, while at the same time enabling
sufficient depth and diversification to bring investment risk to a
theoretical minimum. These benefits are considerable:
HOOPP (2018) calculates that replicating a 70% income
replacement rate in retirement by an individual costs nearly $900,000
more over a lifetime than it does to participate in a Canada-model DB
plan.<sup>5</sup> Of course, investment risk
cannot be made to disappear at any point in time, but by
aggregating many individuals not just across the same age group but
through the entire age spectrum, a pension pool creates significant
timewise averaging. In effect, younger contributors
can help support retirees during adverse financial market
events, simply because they have a long horizon in front of them. For
example, workers who planned to retire at the end of 2008 who were not
participants in a plan faced a significant loss
of retirement wealth, and many were forced to delay retirement
until markets had recovered. This risk is vastly reduced when pooled
with younger workers.</p>
<h3 style="padding-top: 10px;">A diminished role for housing?</h3>
<p>Wider participation in DB pension plans in Canada could have a
significant impact on the housing market, but it is not obvious in which
direction.</p>
<p><b>In effect, the incentive to save for retirement through housing
would be diminished if more people were covered by pension plans. If
housing services were seen more as a consumable rather than a core
investment vehicle, greater indifference between
renting and owning could emerge, thereby reducing the propensity
to own a home. At the same time, rising economic and financial
volatility will mean that home ownership will be riskier and potentially
less valuable as a lifetime savings vehicle,
perhaps leading to a structural shift toward renting beyond that
being forced by declining housing affordability.</b></p>
<p><b>Of course, it is also possible that higher lifetime income
security due to participation in a DB pension plan would make
individuals even more willing than now to take on a large mortgage to
own their home. At the same time, it is possible that rising
retirement income security would make it feasible for financial
institutions to offer much longer mortgage amortization schedules than
they do now, or offer housing finance schemes that support shared
ownership or shared-equity mortgages. Therefore,
it is possible that wider pension coverage could lead toward
even higher rates of home ownership, all things considered.</b></p>
<p><b>Either way, wider pension coverage would serve to reduce the
vulnerability of the typical household to big fluctuations in the
housing market. </b>Since greater volatility in housing would be an
inevitable consequence of rising macroeconomic risk, wider
pension coverage would again serve to stabilize the economy.</p>
<h3 style="padding-top: 10px;">The path forward</h3>
<p>The gist of this analysis is that Canadians are less prepared for
retirement than they should be. And given the rising tide of economic
and financial volatility that is on its way, they are less prepared than
they think they are.</p>
<p>I believe that there are natural forces in motion that should
foster a renaissance of the DB pension plan. The biggest risk that
companies will face is of not retaining the human resources they need to
execute their business, and enhancing lifetime
security through DB pension plans is one tool they will turn to.
Governments would be well advised to find innovative ways to promote
this renaissance, and to bring forward policies that will make it happen
more easily.</p>
<p>In this respect, the retirement system needs to be thought about
along with all the other things governments do for people throughout
their lives. Among other things, this would mean ensuring that there are
no barriers to participation in existing
pension plans, whether by individuals acting alone, by
individuals acting along with contributions from their private-sector
employers. Indeed, it may make fiscal sense for governments to create
even richer tax incentives to encourage such pension
participation, because tax revenues would rise and the use of
other fiscal stabilization channels would decline. Such tools should be
explicitly designed with small companies, part-time workers, gig
workers, and self-employed individuals in mind.
A fulsome review of both Federal and Provincial pension
regulations with a view to expanding DB plan participation in these ways
should be undertaken. Plans that have been set up for a specific
constituency are fine, provided that they are sufficiently
large to maximize pooling benefits. Allowing such plans to
broaden their constituencies or to merge with others, or promoting the
creation of new pension umbrellas to create more scale, seem like the
right way forward. Throughout, governments
need to be mindful that the internationally acclaimed Canada
pension model is founded on operational independence, a valuable
characteristic worth maintaining.</p>
<p><b>Today, governments are ill-prepared to act as a fiscal backstop
should a retirement crisis emerge. Even so, a more aggressive
enhancement of our foundational government-provided pension plans (CPP,
QPP) should still be considered. A fulsome cost-benefit
analysis of such an enhancement needs to take into account the
potential tax revenue benefits that would come from higher average
economic growth in a setting with higher retirement security, as well as
the savings in health care costs (both physical
and mental) and other fiscal stabilization expenditures that
would be likely to accrue in a world with broader robust pension
coverage.</b></p>
<p><b>Housing undoubtedly will remain core to the retirement plans of
many Canadians, even though home ownership is becoming less attainable
through time. Governments are in a position to foster more lifetime
flexibility on this front, too. Housing finance
today is locked in a very old model grounded in 25- or 30-year
amortizations and specific requirements around down payments. A more
flexible approach would allow households to aspire to varying levels of
partial home ownership, shared equity mortgages,
or longer amortization periods, provided there is an investor or
pool of investors on the other side of the trade. Such reforms would
help preserve housing as a channel of retirement security, while also
improving housing accessibility today.</b></p>
<p><b>Another potential mitigant of rising retirement risks is for
governments to encourage individuals to work longer, even if on a
part-time or occasional basis. This would include keeping pensions
highly flexible so that people can choose from many different
paths forward in the later years of life, without compromising
their income security.</b></p>
<p>Retirement is becoming a bigger share of everyone’s total
lifetime as longevity rises. <b>Canadians used to work most of their lives,
retiring at 65 and dying 7 years later. Now they may work for only 70%
or even 60% of their lives. Yet life has
become riskier, and many signs suggest that it will become even
more so, reducing the quality of life for a large cohort of our society.</b>
The arithmetic of lifetime income risk has been altered significantly.
The social benefits of a more robust
pension system could be unmeasurably large, and we need to bring
a more holistic lens to the conversation.</p></blockquote><p></p>
</div>
</div>
</div>
</div><p class="c-article-body__text text-pr-5"></p><p class="c-article-body__text text-pr-5">These are great insights from Stephen Poloz, someone I worked with ages ago at BCA Research, someone I respect and admire.</p><p class="c-article-body__text text-pr-5">Steve understands the tectonic shifts that are underway now and he feels they will cause more financial and macroeconomic uncertainties.</p><p class="c-article-body__text text-pr-5">In light of this, now more than ever it's critically important to reduce retirement risk so Canadians that are living longer can plan better for retirement and not worry about outliving their savings.</p><p class="c-article-body__text text-pr-5">I come at this from a right of center point of view, good retirement policy is good economic policy over the long run.</p><p class="c-article-body__text text-pr-5">The private sector solutions are woefully inadequate so we need to either enhance the CPP, introduce a new entity with similar governance to manage private sector pension plans (DB and DC) or make it easier for CAAT Pension Plan, OPTrust, IMCO, UPP and others to provide DB solutions to more Canadians working across the public and private sector.</p><p class="c-article-body__text text-pr-5">I look at markets constantly. At the end of each trading day, I can tell you what moved and what's probably going to move.</p><p class="c-article-body__text text-pr-5"><b>I haven't seen this much concentration risk since the tech bubble of 2000, it's absolutely insane.</b></p><p class="c-article-body__text text-pr-5"><b>These aren't the type of markets you want people to be speculating in to be able to retire in dignity and security</b>.<br /></p><p class="c-article-body__text text-pr-5">And what about housing? Steve Poloz mentions that housing will always play a role in the retirement security of Canadians and today I noticed a <a href="https://www-theglobeandmail-com.cdn.ampproject.org/c/s/www.theglobeandmail.com/amp/investing/personal-finance/retirement/article-forget-downsizing-canadian-seniors-staying-in-large-houses-well-into/" target="_blank">Globe and Mail article</a> Andrew Molson posted on LinkedIn on how Canadian seniors are staying in large houses well into their 80s, due in part to lack of options:</p><p class="c-article-body__text text-pr-5"></p><blockquote><p class="c-article-body__text text-pr-5">A Canadian Mortgage
and Housing Corporation report in November found that the sell rate for
each five-year age cohort for those aged 75 and over<b> </b>has been trending downward since the early 1990s, putting increasing pressure on the housing market.</p><p class="article-body__text text-pr-5 font-pratt"><a href="https://www.cmhc-schl.gc.ca/blog/2023/understanding-impact-senior-households-canada-housing-market" target="_top">The report</a>,
titled Understanding the Impact of Senior Households on Canada’s
Housing Market, said the sell rate among that age group has fallen about
six percentage points in the past 30 years.</p><p class="article-body__text text-pr-5 font-pratt"><b>Seniors are now less
likely to sell their homes before age 85, it said, noting the
demographic shift needed to free up a meaningful amount of housing stock
won’t start happening for several years. “According to Statistics
Canada’s demographic projections, population growth in the 85-and-over
age group will be higher from 2030 to around 2040.”</b></p><p class="article-body__text text-pr-5 font-pratt"><b>CMHC
economist Francis Cortellino wrote a large part of the report, and said
“better health and better wealth” is part of what is keeping people at
home longer, but so is a lack of options. Those who would be willing to
downsize, he said, are often stymied by a lack of housing variety in
their communities, so they stay in their homes to remain close to their
friends.</b></p><p class="article-body__text text-pr-5 font-pratt"><b>“Solutions
aimed at increasing supply from existing units (by creating secondary
suites or laneway homes, for example) could be increasingly considered.”
the report said.</b></p><p class="article-body__text text-pr-5 font-pratt">Mr.
Cortellino said that in many of Canada’s large cities, seniors living
alone or couples over age 75 are more likely than young families to live
in single-family homes with three or more bedrooms. (A <a href="https://www.theglobeandmail.com/business/article-vacant-bedrooms-seniors-downsizing-options/" target="_top">Globe and Mail analysis</a>
of 2021 census data found the percentage of singles and couples who
live in homes that have a minimum of three bedrooms increased to 29 per
cent that year, from 26 per cent in 2006.)</p><p class="article-body__text text-pr-5 font-pratt">He said he’s found
anecdotally that many people are instead “downsizing from the inside” –
only using a small part of their house, often the ground floor, and
often closing off or limiting heating in the rest.</p><p class="article-body__text text-pr-5 font-pratt">Several other reports confirm parts of his findings. Real estate and mortgage company<a href="https://www.redfin.com/news/empty-nesters-own-large-homes/" target="_top"> Redfin published a report</a>
in January that found that in the United States, “empty-nest baby
boomers own 28 per cent of the nation’s large homes [with three or more
bedrooms], while millennials with kids own just 14 per cent.”</p></blockquote><p class="article-body__text text-pr-5 font-pratt"></p><p class="article-body__text text-pr-5 font-pratt">Anyway, this article got my personal chat group talking and while I don't think it's wise to stay in a home past the age of 75, others disagreed with me.</p><p class="article-body__text text-pr-5 font-pratt">Could it be that Canadians are staying in their home longer to use it as a piggy bank to help their children buy a starter home? I don't know, I find these trends highly specious and wonder what is the real root cause of staying in a home which requires a lot of maintenance and work past the age of 80.</p><p class="article-body__text text-pr-5 font-pratt">I know the pandemic changed people's perceptions about living in a condo but that's over.</p><p class="article-body__text text-pr-5 font-pratt">Truth is if you're in relatively good shape and are able to travel, you're much better off downsizing and living in a condo during your retirement years.</p><p class="article-body__text text-pr-5 font-pratt">Maybe Canadians are living in their home longer but you really need to dig deeper to understand why and this paper and article don't do that.</p><p class="article-body__text text-pr-5 font-pratt">Alright, it's only Monday and I've rambled on long enough.</p><p class="article-body__text text-pr-5 font-pratt">Before I forget, please take the time to listen to former Governor of Bank of Canada and Special Advisor for Osler, Hoskin & Harcourt, Stephen Poloz <a href="Why Defined Benefit Pension Plans Benefit Both Employers and Employees. A Q&A with Stephen Poloz" target="_blank">share his thoughts</a> on why DB plans are an effective way to save for retirement, how the power dynamic is shifting and why employers can benefit from DB plans:</p><p><b></b></p><blockquote><p><b>Russell Evans: </b>Why are defined benefit (DB) pensions such an efficient and effective way to save for retirement?</p>
<p><b>Stephen Poloz: </b>There are massive gains in scale.
First of all, the most important thing that happens is your longevity
risk, the risk that you're going to live long. Sounds like a good risk,
but if you're going to live long, longer than your financial situation
allows, then you're in a pickle. You have no idea how long you'll live.
So, you over save for that, and so, you underspend your whole life. The
efficiencies of a pool of pension money, both across longevity risk and
then, across market risk and the ability to compensate people in
retirement because there's overlapping generations. That's a really
important key, when there's no overlapping generation to take care of
downside risk. All those things kind of melt away when you create a
pension pool. Of course, if you run it by professionals, state of the
art, then you're guarding against the typical risks and you're
minimizing the costs around it.</p>
<p><b>Russell Evans: </b>The shift away from defined benefit
pension plans was not a good move for workers. And as Stephen says, the
power dynamic at that point was still very much on the employer side.</p>
<p><b>Stephen Poloz: </b>I think what happened is that the
market power in that space between employers and employees shifted
towards employers. So, what we have then is a whole generation like our
baby boomers that are retiring. We have a gigantic retirement wave here
in Canada. 15,000 people are retiring every month, all that human
capital heading for the door. So, what happens is over the next 10
years, we're going to have more fallout and we're shifting to a relative
shortage of workers. I'm talking much more profound than the shortage
we experienced in the wake of the pandemic. I think what's going to
happen then is the power is shifting back from the employer to the
employee. And we're seeing early signs of companies being on the leading
edge of that, for example, Walmart or Amazon.</p>
<p><b>Russell Evans: </b>Why do you think employers should consider DB pension plans?</p>
<p><b>Stephen Poloz: </b>I think the biggest and most
practical risk that companies will face will be they won't be able to
get the workers they need in order to complete their business plan. But
I think for the next four or five years, it's become much more apparent
as the retirement wave follows through. And in that situation, then
firms are going to say, how do I manage that risk, will I pay a higher
salary, or do I have a games room to attract people to the office and
they can spend an hour of their day? Everybody's got their own ideas
around this, but I think one of the most powerful ones will be to put
more of the pie into the retirement window. People will find that that's
a great place to work, because I know I can spend my whole paycheck if I
want, because I know that 25 years from now or 35 years from now, when
I'm done, I I've got it covered. I'll still be able to live a good
lifestyle. I think this is going to be the most powerful weapon of all.
</p></blockquote><p></p><p class="article-body__text text-pr-5 font-pratt">Steve spoke with CAAT Pension Plan's Russell Evans as part of their Contributors series. You can listen to the full episode <a href="https://www.caatpension.ca/podcast/blog/Why-Defined-Benefit-Pension-Plans-Benefit-Both-Employers-and-Employees" target="_blank">here</a>. </p><p class="article-body__text text-pr-5 font-pratt">Below, Stephen Poloz talks to Pamela Wallin on how the world can adapt to a riskier future (great discussion). <br /></p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/e_AMX-vNnrk?si=nx5ADcXBk5K4EV2_" title="YouTube video player" width="640"></iframe>Leo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.com0tag:blogger.com,1999:blog-5879608286191780679.post-43553673406963748172024-02-09T19:05:00.012-05:002024-02-10T11:29:50.391-05:00Forget The S&P 5,000 Milestone, Enjoy The Super Bowl!<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjly0Lsb4k74ea_eDKYfM_jooExbjBWn3YJAefJr3N__aHGymcUbPd8pU-h3rsjG76Hh-cbUoddA8xpWwY6Ao1oweRZOC4lpGMBpwFIzF_ZBCQhiX4bFjvRae6X0WZMyN9GuDSVTRJtSGhofL83-kYKXxnpp0bya90E9p9nCWaL1yA2-9ct7zR0IXmgk7nc/s934/Usher%20Yeah.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="707" data-original-width="934" height="303" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjly0Lsb4k74ea_eDKYfM_jooExbjBWn3YJAefJr3N__aHGymcUbPd8pU-h3rsjG76Hh-cbUoddA8xpWwY6Ao1oweRZOC4lpGMBpwFIzF_ZBCQhiX4bFjvRae6X0WZMyN9GuDSVTRJtSGhofL83-kYKXxnpp0bya90E9p9nCWaL1yA2-9ct7zR0IXmgk7nc/w400-h303/Usher%20Yeah.jpg" width="400" /></a></div>Samantha Subin and Yun Li of CNBC <a href="https://www.cnbc.com/2024/02/08/stock-market-today-live-updates.html" target="_blank">report</a> the S&P 500 closes above 5,000 for first time ever, notches fifth straight winning week: <br /><p></p><p></p><blockquote><p>Stocks rose on Friday after <a href="https://www.cnbc.com/2024/02/09/-inflation-in-december-was-even-lower-than-first-reported-the-government-says.html">December’s revised inflation reading</a>
2
came in lower than first reported, and the S&P 500 closed above the
3
key 5,000 level as strong earnings and economic news chugged on.</p><p>The <span class="QuoteInBody-quoteNameContainer" data-test="QuoteInBody" id="LiveBlogArticle-QuoteInBody-2">S&P 500 </span>rose 0.57% to end at 5,026.61, while the <span class="QuoteInBody-quoteNameContainer" data-test="QuoteInBody" id="LiveBlogArticle-QuoteInBody-3">Nasdaq Composite<span class="QuoteInBody-inlineButton"><span class="AddToWatchlistButton-watchlistContainer" data-analytics-id="-WatchlistDropdown" id="-WatchlistDropdown"></span></span></span> rallied 1.25% to close at 15,990.66. The <span class="QuoteInBody-quoteNameContainer" data-test="QuoteInBody" id="LiveBlogArticle-QuoteInBody-4">Dow Jones Industrial Average </span>slipped 54.64 points, or 0.14%, to settle at 38,671.69.</p><p><b>For
4
the week, the S&P added 1.4%, while the Nasdaq gained 2.3%. The Dow
5
finished flat. All three major averages notched their fifth straight
6
winning week and 14th positive week in 15.</b></p><p><b>“At the end of the day,
7
we’re still seeing whopping good news on an economic front, and the
8
market is reacting to that,” said Dana D’Auria, co-chief investment
9
officer at Envestnet. “The longer that story plays out, the more likely
10
it seems to the market that we actually are sticking a landing here.”</b></p><p><b>A
11
solid earnings season, easing inflation data and a resilient economy
12
have charged 2024′s market rally. It’s also propelled the S&P to
13
close above the 5,000 level after first touching the milestone during
14
Thursday’s session. The index first crossed 4,000 in April 2021</b>.</p><p><b>“A close above this closely watched level will undoubtedly create
15
headlines and further feed fear of missing out (FOMO) emotions,” said
16
Adam Turnquist, chief technical strategist at LPL Financial. “Outside of
17
a potential sentiment boost, round numbers such as 5,000 often provide a
18
psychological area of support or resistance for the market.”</b></p><p>A <a href="https://www.cnbc.com/2024/02/09/-inflation-in-december-was-even-lower-than-first-reported-the-government-says.html">revision lower</a>
19
in December’s consumer price index also helped sentiment. The
20
government adjusted the figure to a 0.2% increase, down from a 0.3%
21
increase initially reported. Core inflation figures, excluding food and
22
energy, were the same. January’s CPI figures are due out next week.</p><p>Megacap technology stocks gained again on Friday, contributing to the S&P’s march above 5,000. <span class="QuoteInBody-quoteNameContainer" data-test="QuoteInBody" id="LiveBlogArticle-QuoteInBody-6">Nvidia </span>jumped 3.6%, and <span class="QuoteInBody-quoteNameContainer" data-test="QuoteInBody" id="LiveBlogArticle-QuoteInBody-7">Alphabet<span class="QuoteInBody-inlineButton"><span class="AddToWatchlistButton-watchlistContainer" data-analytics-id="-WatchlistDropdown" id="-WatchlistDropdown"></span></span></span> added more than 2%. <span class="QuoteInBody-quoteNameContainer" data-test="QuoteInBody" id="LiveBlogArticle-QuoteInBody-8">Cloudflare<span class="QuoteInBody-inlineButton"><span class="AddToWatchlistButton-watchlistContainer" data-analytics-id="-WatchlistDropdown" id="-WatchlistDropdown"></span></span></span> skyrocketed 19.5% on <a href="https://www.cnbc.com/2024/02/08/stock-market-today-live-updates.html#">strong earnings</a>, boosting the broader cloud sector in tandem. Semiconductor stocks also rose, with the <span class="QuoteInBody-quoteNameContainer" data-test="QuoteInBody" id="LiveBlogArticle-QuoteInBody-10"><a href="https://www.cnbc.com/quotes/SMH/">VanEck Semiconductor ETF</a><span class="QuoteInBody-inlineButton"><span class="AddToWatchlistButton-watchlistContainer" data-analytics-id="-WatchlistDropdown" id="-WatchlistDropdown"></span></span></span> <span class="QuoteInBody-quoteNameContainer" data-test="QuoteInBody" id="LiveBlogArticle-QuoteInBody-11"><a href="https://www.cnbc.com/quotes/SMH/">(SMH)</a> </span>edging up 2.2%.</p><p>The back half of the fourth-quarter earnings reporting period pressed on, with <span class="QuoteInBody-quoteNameContainer" data-test="QuoteInBody" id="LiveBlogArticle-QuoteInBody-12">PepsiCo </span>falling 3.6% on mixed results. <span class="QuoteInBody-quoteNameContainer" data-test="QuoteInBody" id="LiveBlogArticle-QuoteInBody-13">Take-Two Interactive<span class="QuoteInBody-inlineButton"><span class="AddToWatchlistButton-watchlistContainer" data-analytics-id="-WatchlistDropdown" id="-WatchlistDropdown"></span></span></span> slumped 8.7% on a disappointing outlook, while <span class="QuoteInBody-quoteNameContainer" data-test="QuoteInBody" id="LiveBlogArticle-QuoteInBody-14">Pinterest </span>dropped 9.5% after <a href="https://www.cnbc.com/2024/02/08/pinterest-pins-q4-earnings-report-2023.html">issuing a weaker-than-expected forecast</a> and missing revenue estimates.</p><p><b>Despite
23
these negative prints, earnings have so far proven more robust than
24
expected. A total of 332 S&P companies have reported results, with
25
about 81% of them reporting earnings above analyst expectations,
26
according to LSEG. That compares to a 67% beat rate in a typical quarter
27
since 1994.</b></p></blockquote><p>There's no doubt that companies are reporting strong earnings and beating expectations.</p><p>To wit, just a few I tracked this week:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjO1o1zIqhyphenhyphenMEhX8i_-M6eP9Qs1LTud_o-hrgazFnXa8biwFjYZxOr1isZHXpRmioZjz3C6p7s3BPNQ1WqVK2Pi5qMP7yesTTV9W9Q8SGy5UhlFL3MEUjnXDfu9Pjzw_Qq5htlqDKhDdBwVH3YGvwjFEceW1tHZj3Gjj0xpuCvmliWbY0JB_Jior41SV_bF/s938/ARM.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="625" data-original-width="938" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjO1o1zIqhyphenhyphenMEhX8i_-M6eP9Qs1LTud_o-hrgazFnXa8biwFjYZxOr1isZHXpRmioZjz3C6p7s3BPNQ1WqVK2Pi5qMP7yesTTV9W9Q8SGy5UhlFL3MEUjnXDfu9Pjzw_Qq5htlqDKhDdBwVH3YGvwjFEceW1tHZj3Gjj0xpuCvmliWbY0JB_Jior41SV_bF/w640-h426/ARM.jpg" width="640" /></a></div><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjyzCHQBOrvOzUW7Vs5WqQM8xe4c0RqYRyfruZPD7zrbPrtBHH1uIUsSzNszweXogehmxzYH90CcwcZLCO7u-mPpElC2s80klFoyUX9O5ZnWjzL4HPoZFRRKzHDBp0tvuskmKy70rHQthPxiCEUAUMRUrDctAoUlLuTCLkXjQtJg01Fq9xaMM9N4SbJVatO/s943/PLTR.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="614" data-original-width="943" height="416" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjyzCHQBOrvOzUW7Vs5WqQM8xe4c0RqYRyfruZPD7zrbPrtBHH1uIUsSzNszweXogehmxzYH90CcwcZLCO7u-mPpElC2s80klFoyUX9O5ZnWjzL4HPoZFRRKzHDBp0tvuskmKy70rHQthPxiCEUAUMRUrDctAoUlLuTCLkXjQtJg01Fq9xaMM9N4SbJVatO/w640-h416/PLTR.jpg" width="640" /></a></div><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh9KZTmca8aC561qB45raqG5MtXKuajckP0gsf-O-msFwJ0KeYQEUZFV60ExmBoSUmKIChseuXau_-MJ_aUxup3dZq-yEtDyeG_5hjZIvBC1h4LKmyivcvo_CqrN_tyhk-sPgBwFg8o8uhbVlBPyrxyA-cjPRIlWTWrtjzURaJgTk-BiwkQqqd1eYrv65Qt/s937/DIS.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="608" data-original-width="937" height="416" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh9KZTmca8aC561qB45raqG5MtXKuajckP0gsf-O-msFwJ0KeYQEUZFV60ExmBoSUmKIChseuXau_-MJ_aUxup3dZq-yEtDyeG_5hjZIvBC1h4LKmyivcvo_CqrN_tyhk-sPgBwFg8o8uhbVlBPyrxyA-cjPRIlWTWrtjzURaJgTk-BiwkQqqd1eYrv65Qt/w640-h416/DIS.jpg" width="640" /></a></div><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjKZ-dL0zBUxRasB1FvAmGgZadFOFqOwFH6I5WmmXPzCHh6ZXEl-apynYsQHd1n9fgrk9FYVYUBqB7nrxN7OmafeYNJbl0BeYQgrC1hZjb9Z7M-eHF6VPpH9OZVxxKxl2hVmsKsVdYoq-v0bFo1zL9MWEP03Q6i51FV2h0VoS2YRoSCQCGjIh3UnNZYJH2F/s639/EL.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="438" data-original-width="639" height="438" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjKZ-dL0zBUxRasB1FvAmGgZadFOFqOwFH6I5WmmXPzCHh6ZXEl-apynYsQHd1n9fgrk9FYVYUBqB7nrxN7OmafeYNJbl0BeYQgrC1hZjb9Z7M-eHF6VPpH9OZVxxKxl2hVmsKsVdYoq-v0bFo1zL9MWEP03Q6i51FV2h0VoS2YRoSCQCGjIh3UnNZYJH2F/w640-h438/EL.jpg" width="640" /></a></div><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjUkPU31iL4kygg3UETEy2i9vd_IsAOrohe0GMTpSYsjdOK4E26Qs74Pc8mjcx0NGGOJDYB0kCz6_4I_vfO81VRRTNRuFxyLuO43LEwTx9w6SaiP0KYCZ0PwE_cZv_K7c3tsinHa4uOELrAXkAMDFL3QINLS6rV2CQVm2Yg-FqXHvMGU4dYEhOfl45Pr41U/s933/LLY.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="652" data-original-width="933" height="448" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjUkPU31iL4kygg3UETEy2i9vd_IsAOrohe0GMTpSYsjdOK4E26Qs74Pc8mjcx0NGGOJDYB0kCz6_4I_vfO81VRRTNRuFxyLuO43LEwTx9w6SaiP0KYCZ0PwE_cZv_K7c3tsinHa4uOELrAXkAMDFL3QINLS6rV2CQVm2Yg-FqXHvMGU4dYEhOfl45Pr41U/w640-h448/LLY.jpg" width="640" /></a></div><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhaIemyZPMXMqjfalWqCxzZJnACxNCGIr9DKtem5j_TCXRgiaKNc2VeOiFVAhNgvRTMhUoNZv6l2i1HSHM7ZOnQ53sfju22I1BvH2uVtKVrY0MvDBGe4uD9iKNMQ4G9okK3WZIobnR06KEvjFMoJgYxyi9r0bdJdxSo3veuWRsDcwmcHwZedtMVvv6Gk4zf/s958/RL.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="614" data-original-width="958" height="410" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhaIemyZPMXMqjfalWqCxzZJnACxNCGIr9DKtem5j_TCXRgiaKNc2VeOiFVAhNgvRTMhUoNZv6l2i1HSHM7ZOnQ53sfju22I1BvH2uVtKVrY0MvDBGe4uD9iKNMQ4G9okK3WZIobnR06KEvjFMoJgYxyi9r0bdJdxSo3veuWRsDcwmcHwZedtMVvv6Gk4zf/w640-h410/RL.jpg" width="640" /></a></div><br />There were plenty of other winners and losers this week. IBD did a good weekly earnings roundup <a href="https://www.investors.com/news/stock-market-hits-highs-as-arm-palantir-cloudflare-skyrocket/?src=A00220" target="_blank">here</a>.<p></p><p>When you see stocks popping 15, 20, 30% or more after earnings, you know there's still plenty of liquidity out there chasing stocks.</p><p>It's actually incredible because <b>the macro backdrop remains poor</b> and yet earnings keep forging ahead, for now.</p><p>And if earnings remain relatively strong, then companies will not shed labor to cut costs.</p><p>But all this will not last. We are already seeing signs of slowing and major tech companies are starting to shed jobs, Cisco being the latest one:</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">BREAKING: Cisco, <a href="https://twitter.com/search?q=%24CSCO&src=ctag&ref_src=twsrc%5Etfw">$CSCO</a>, is planning to cut "thousands of employees" in a massive corporate restructuring, according to Reuters.<br /><br />The company is looking to focus on high-growth areas in its restructuring initiatives.<br /><br />An announcement could come next week as the company prepares… <a href="https://t.co/9XcGlbW8cv">pic.twitter.com/9XcGlbW8cv</a></p>— The Kobeissi Letter (@KobeissiLetter) <a href="https://twitter.com/KobeissiLetter/status/1756016610542752147?ref_src=twsrc%5Etfw">February 9, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script> <p></p><p>And as Francois Trahan reminds us, earnings still drive the show when it comes to labor markets and many companies are struggling:</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">One thing that seems clear from Q4 EPS reporting season thus far is that some companies are struggling to keep up with expectations. Surely, the Magnificent 7 are fine (sorry, meant to say Magnificent 6), but numerous large companies have disappointed. <a href="https://t.co/Y6BrRnwEAj">pic.twitter.com/Y6BrRnwEAj</a></p>— Francois Trahan (@FrancoisTrahan) <a href="https://twitter.com/FrancoisTrahan/status/1755225791045243021?ref_src=twsrc%5Etfw">February 7, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script> <p></p><p>Still, overall earnings remain robust which is why the S&P 500 closed over the 5,000 mark.</p><p>I
don't get too excited with these milestones because as Martin Roberge of
Canaccord Genuity reminds us in his latest weekly wrap-up, market risks
rise considerably once stocks rise 5% above a milestone:</p><p></p><blockquote><p>With the S&P 500 potentially closing above 5,000, our <i>Chart of the Week</i>
shows the S&P 500 performance after the index cleared similar
milestones at 1,000, 2,000, 3,000, and 4,000. <b>One key takeaway from our
chart is that, historically, a milestone tends to act as an anchor
rather than as a springboard for stocks</b>. We can see that more often than
not, at one point, gains past the milestone are lost within the next
year. In fact, each episode contains an interim peak-to-through drawdown
of at least 12% (min. 12.4% in 2015 and max. 33.9% in 2020). <b>These
corrections, however, tend to occur in the second 6-month tranche of the
12-month window. Last, with the S&P 500 up ~23% Y/Y at the 5,000
milestone, the current episode may compare more to the 1,000 and 2,000
milestones, in our view, two episodes showing that market risk rises
considerably if the S&P 500 jumps > 5% above the milestone. This
would equate to SPX > 5,250.</b> In all, though one-year returns after
previous milestones are skewed positively, we believe investors must
adopt a more tactical approach to markets and be wary of a 10%+
drawdown, which has been the norm rather than the exception.</p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQ1YGlpfvs8tnZ9f_QP44Ue1reEuTb0gumplIXVKIY0197hDqK1bUo5NhySAM52LSlUsgkJxN3bg_qG2JnD42PyXOHiIF9iMneeuALa9lz7nD5gntNS-Tm7I4Ha34QVvCgTsd2gNkJ75eS6E4tyABa5-Mv8-4xa2BAt3RaunRr08bkcSEolYOasQ6-iVQ9/s837/chart%20of%20the%20week.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="837" data-original-width="693" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQ1YGlpfvs8tnZ9f_QP44Ue1reEuTb0gumplIXVKIY0197hDqK1bUo5NhySAM52LSlUsgkJxN3bg_qG2JnD42PyXOHiIF9iMneeuALa9lz7nD5gntNS-Tm7I4Ha34QVvCgTsd2gNkJ75eS6E4tyABa5-Mv8-4xa2BAt3RaunRr08bkcSEolYOasQ6-iVQ9/w530-h640/chart%20of%20the%20week.jpg" width="530" /></a></div><p></p></blockquote><p>What
this tells me is we are cruising for a bruising and I'm expecting
something will hit markets by the end of Q1 or Q2, and it's not going to
be good.</p><p>And again, if you look closely at companies that reported, the <a href="https://www.barrons.com/articles/s-p-5000-chaos-recession-b8f9bda4" target="_blank">S&P 5000 cannot mask the chaos beneath the calm</a>:</p><p></p><blockquote><p>The calm, however, is only surface deep. Nowhere is that more true than
in shares of companies that have reported their fourth-quarter results.
Yes, we know that earnings are supposed to cause stocks to have big
moves. But the recent responses have been larger than normal: As of
Thursday, the median S&P 500 stock has moved 3.6% after reporting,
according to Dow Jones market data, nearly a point higher than the 2.7%
median over the past 10 years.</p><p class="css-k3zb6l-Paragraph e1e4oisd0" data-type="paragraph"><b>These
large swings are happening because the outlook for companies is far less
certain than what it appears to be for the overall market</b>. It also
reflects the uncertainty many investors feel as they watch an expensive
market—the S&P 500 trades at 20.4 times 12-month forward
earnings—make its way higher while seeming to ignore the possibility
that economic growth could decelerate, disinflation could peter out
short of the Fed’s target, or that rates could remain right where they
are.</p><p class="css-k3zb6l-Paragraph e1e4oisd0" data-type="paragraph"><b>“You’ve got investors on edge, so they’re reacting somewhat more intensely to these results,” says Sevens Report’s Tom Essaye.</b></p><p class="css-k3zb6l-Paragraph e1e4oisd0" data-type="paragraph">For now, that volatility isn’t reflected in the <span class="css-ndwbas" data-id="components_CompanyLink_CompanyLinkWrapper"><a class="ekxajjj0 css-urs5l7-OverridedLink" data-id="components_sharedStyles_StyledOverrideLink" data-type="phrase" href="https://www.barrons.com/market-data/indexes/vix?mod=article_chiclet" rel="" target="_blank">Cboe Volatility Index</a></span>,
or VIX, which sits near 12.8, well below its 20-year average of 17.7
and down from 21.7 on Oct. 20, a level that seems too low given the
S&P 500’s 21% gain since bottoming in October—and given the risks
that are lurking.<b> Those risks include high valuations, sticky inflation,
a cautious Fed, and even a mild recession, according to Evercore ISI
strategist Julian Emanuel, who thinks the next big move in the S&P
500 could be 10% to the downside. “Volatility is the baseline, not the
outlier,” he writes.</b></p><p class="css-k3zb6l-Paragraph e1e4oisd0" data-type="paragraph"><b>And something investors should start preparing for now.</b></p></blockquote><p class="css-k3zb6l-Paragraph e1e4oisd0" data-type="paragraph"></p><p class="css-k3zb6l-Paragraph e1e4oisd0" data-type="paragraph">Indeed,
the cost of protection hasn't been this low for a while and vol sellers
are picking dimes in front of a steamroller, but they remain on
the right side of that trade, for now.</p><p></p><p>As far as the
S&P 500 reaching the 5,000 milestone, be prepared for anything here
and no Nvidia will not save your portfolio when it hits the fan:</p><p></p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">For those wondering how NVDA can continue going higher every day, consider that the top performing ETF year-to-date is a 2x futures-levered single stock ETF (NVDX). Combined with record call option volume. <br /><br />Making Nvidia the most juiced stock in market history. <a href="https://t.co/8P5IWrDoT5">pic.twitter.com/8P5IWrDoT5</a></p>— Mac10 (@SuburbanDrone) <a href="https://twitter.com/SuburbanDrone/status/1756044186011205688?ref_src=twsrc%5Etfw">February 9, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script>
<p>Lastly, my former boss now Canadian senator, Clement Gignac, posted this on LinkedIn:</p><p></p><blockquote><p>Superbowl advertising indicator:</p><p>
Still too much liquidity in the economy …or just the Taylor Swift effect? </p><p>
<b>The cost for a 30-second commercial during the Super Bowl has reached
a record high this year: $7 million. Some advertisers are even paying
$4 million for a pregame ad.</b></p><p>
Since the first Super Bowl in 1967, the cost of a 30-second ad has gone
up 185x, according to a research paper from BofA Securities that was
published on Thursday. An ad back in 1967 cost $37,500.</p><p>
A 185x jump since 1967, even considering the higher-than-normal recent
inflation environment, is huge. If some Super Bowl-watching favorites
kept pace with that type of inflation, chicken wings would cost $43 a
pound today (23 cents a pound in 1967), and a six-pack of beer would be
$340.</p><p>
Non-football items like a gallon of gas would cost $61 today if they
inflated as much as the price of a Super Bowl commercial, the S&P
500 index would be trading at 16,374, and the average price of a house
would be $4.2 million.</p><p>
<b>Hum! Hard to believe that US economy needs Fed rate cuts before summer!</b></p><p>
</p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiSgS8CBYnmivSwoeaiKXDHkFWifcgjcAAgFKLdvNPbZ8MM7nuTNz3rAPWYq0gHwbRMIcqeVk9SLPBvKor4QO95ugsE0ub4Ppdo3uhQ5XXM9zpZcIsi2ZEpp9iQR4vNpXLzlIaM_1nCv5KOPVBM_hAHE0wEzk-wOl6oozstyed_vYsEm-TXuMlt4oy31vTm/s800/SB%20tickets.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="571" data-original-width="800" height="285" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiSgS8CBYnmivSwoeaiKXDHkFWifcgjcAAgFKLdvNPbZ8MM7nuTNz3rAPWYq0gHwbRMIcqeVk9SLPBvKor4QO95ugsE0ub4Ppdo3uhQ5XXM9zpZcIsi2ZEpp9iQR4vNpXLzlIaM_1nCv5KOPVBM_hAHE0wEzk-wOl6oozstyed_vYsEm-TXuMlt4oy31vTm/w400-h285/SB%20tickets.jpg" width="400" /></a></div><p></p></blockquote><p>There's way too much money out there (average Super Bowl ticket <a href="https://www.cbsnews.com/news/how-much-super-bowl-2024-tickets-prices/" target="_blank">sold on StubHub</a>
was $8,600, down from about $9,300 on Monday) and I too wonder if the
Fed will cut rates in May or later if this silliness keeps going on
(unless something breaks).</p><p>Alright, enjoy the Super Bowl, it will
be a great game and I can't wait to see it and the Halftime show
featuring Usher and his special guests (Beyonce? Taylor Swift?).</p><p>All
I know is come Monday, either the Chiefs or 49ers will be the Super
Bowl champions and while that's exciting, the S&P reaching 5,000
shouldn't excite you too much, start preparing for the worst.</p><p>
Below, Jeremy Siegel, Wharton School professor, joins 'Closing Bell' to
discuss the S&P 500 closing in on the 5,000 level and what it means
for the markets. </p><p>
Next, Mark Newton, Global Head of Technical Strategy at Fundstrat, and
Stephanie Link, Chief Investment Strategist at Hightower, discuss the
S&P breaking above the 5,000 mark for the first time ever.</p><p>
Third, Katie Stockton, Fairlead Strategies founder and managing partner,
joins 'Squawk Box' to discuss the latest market trends, how far the
S&P 500 can go, consumer sentiment, the Fed's rate path outlook, and
more. </p><p>
Fourth, Doug Clinton, Deepwater Asset Management managing partner, joins
'Closing Bell' to discuss the sustainability of mega cap gains.</p><p>
Fifth, Ed Clissold, Ned Davis Research chief U.S. strategist, joins
'Closing Bell' to discuss the economy and his Fed expectations.</p><p>
Sixth, Komal Sri-Kumar, president of Sri-Kumar Global Strategies, joins
'Squawk Box' to discuss the latest market trends, the looming commercial
real estate crisis, impact on the Fed's rate path outlook, and more.</p><p>
Seventh, China's overreliance on real estate has sent its economy tumbling toward 2008-era financial conditions, Kyle Bass of Hayman Capital told CNBC on Tuesday. </p><p>
Lastly, a little Usher to get you into the Super Bowl this weekend. Yeah!!
</p><p>
<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/qAt4chx7C9Y?si=B2aWZqE2wPnXkPPp" title="YouTube video player" width="640"></iframe></p><p>
<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/lpxxdN6maAQ?si=xsp_4e39RUeRq6mh" title="YouTube video player" width="640"></iframe></p><p>
<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/6Oi0Kndlwt4?si=7m6GCQzTzU3fHyJe" title="YouTube video player" width="640"></iframe> </p><p>
<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/21vKJMNrIqY?si=oJbAN6zLujI3osO1" title="YouTube video player" width="640"></iframe> </p><p>
<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/gi83XP4BotU?si=2kTApltPzMFSlhM7" title="YouTube video player" width="640"></iframe> </p><p>
<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/xiaB5BfIX3M?si=EP9l8daj1w_TBdwx" title="YouTube video player" width="640"></iframe> </p><p>
<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/mJUGoaELVG8?si=cALUS4Zhjzq7mDHU" title="YouTube video player" width="640"></iframe></p><p>
<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/GxBSyx85Kp8?si=prs2Ff_xJVmYJOO3" title="YouTube video player" width="640"></iframe> </p><p></p><p></p><p></p><p></p><p></p><p></p><p></p><p></p><p></p>Leo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.com0tag:blogger.com,1999:blog-5879608286191780679.post-16085909449880771402024-02-08T19:38:00.001-05:002024-02-08T21:40:36.267-05:00OTPP and Linden Capital Launch Platform to Revolutionize Clinical Research <p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjBIRwUVywTBo1MeFEoV_n6DOs4q7IAbhJeASILmCERbphvf-0hlfVtQ686Ti9ZuXwI11e2lpb83UqZL4TTIFaXKpqp-1H25xJPgYCMrehZaBIfhhFpR2rWhB1EWrj5_YaHZiww06MSNxMlayyYVPNP3iUz42o3wwRTP1HS-O7fL3eYVBB78hERqeGJAkih/s452/Dr%20John%20Pothoff.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="452" data-original-width="451" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjBIRwUVywTBo1MeFEoV_n6DOs4q7IAbhJeASILmCERbphvf-0hlfVtQ686Ti9ZuXwI11e2lpb83UqZL4TTIFaXKpqp-1H25xJPgYCMrehZaBIfhhFpR2rWhB1EWrj5_YaHZiww06MSNxMlayyYVPNP3iUz42o3wwRTP1HS-O7fL3eYVBB78hERqeGJAkih/w399-h400/Dr%20John%20Pothoff.jpg" width="399" /></a></div>The Ontario Teachers’ Pension Plan <a href="https://www.otpp.com/en-ca/about-us/news-and-insights/2024/linden-capital-partners-and-otpp-launch-initiative-focused-on-clinical-research-advancement/" target="_blank">announced</a> that along with its partner, Linden Capital, it is launching an initiative focused on clinical research advancement:<p></p><p tabindex="0"></p><blockquote><p tabindex="0">Linden Capital Partners (<b>Linden</b>) and Ontario Teachers’ Pension Plan (<b>Ontario Teachers’</b>) are pleased to announce they are partnering on a <b>transformative platform</b>, led by <a href="https://www.linkedin.com/in/johnpotthoff/" rel="noopener noreferrer" target="_blank" title="Visit website www.linkedin.com (opens in new window)">Dr. John Potthoff</a>,
with the goal of revolutionizing the clinical research ecosystem. This
strategic initiative is centered around investing in exceptional
companies and deploying cutting-edge technology to foster seamless
connections and collaborations among patients, research sites,
pharmaceutical companies, and the broader clinical research community.</p>
<p tabindex="0">The platform will be led by Dr. John Potthoff, who is currently the Chairperson of <a href="https://www.elligohealthresearch.com/" rel="noopener noreferrer" target="_blank" title="https://www.elligohealthresearch.com/ (opens in new window)">Elligo Health Research</a>.
He has more than 30 years of leadership and operational experience in
the life sciences and pharmaceutical services sectors. Dr. Potthoff has
successfully scaled and grown businesses as a founder, entrepreneur, and
CEO.</p>
<p tabindex="0"><b>“We believe our collaboration is a potential
game-changer for clinical research. We see a significant gap in the
industry and believe this strategic alliance will drive meaningful
change and opportunity,” said Dr. Potthoff. “By integrating leading
companies and leveraging advanced technologies, we aim to create a
cohesive and interconnected clinical research environment. Recognizing
the unique needs of each therapeutic and scientific area, we aim to
streamline processes, enhance efficiencies, and foster collaborations
that benefit all stakeholders, especially patients.”</b></p>
<p tabindex="0"><b>The initiative will be chaired by <a href="https://www.linkedin.com/in/margaret-k-bb533952/" rel="noopener noreferrer" target="_blank" title="Visit website www.linkedin.com (opens in new window)">Ms. Margaret Keegan</a>,
an industry luminary with prior executive roles across all functions of
clinical development at large pharmaceutical and CRO companies,
including PPD, IQVIA and PRA Health Sciences.</b> Ms. Keegan is the former
Chair of the Board for CDISC (Clinical Data Interchange Standards
Consortium), the clinical research data standards organization and
currently serves as CEO of <a href="https://www.rqmplus.com/" rel="noopener noreferrer" target="_blank" title="Visit website www.rqmplus.com (opens in new window)">RQM+</a>.
"I am excited to collaborate with Dr. Potthoff, Linden, and Ontario
Teachers’ to realize our shared vision," expressed Ms. Keegan. <b>"We
recognize the inefficiencies and shortcomings of clinical research
services that impact patients, research sites, sponsors, and regulators,
leading to delays in getting critical therapies to patients in need.
Our commitment is to address these challenges head-on and catalyze
positive change in our industry."</b></p>
<p tabindex="0"><b>Vision for a Unified Clinical Research Ecosystem:</b>
<b>The initiative is dedicated to building a more unified and efficient
clinical research ecosystem</b>. Through strategic M&A and the
deployment of technology, it will seek to enhance collaboration across
all aspects of clinical research, from patient engagement through
regulatory submissions, ensuring that every phase of the research
process is seamlessly connected and optimized.</p>
<p tabindex="0"><b>About Linden Capital Partners:</b><br />
Linden Capital Partners is a Chicago-based private equity firm focused
exclusively on the healthcare industry. Founded in 2004, Linden is the
country’s largest dedicated healthcare private equity firm by total
capital raised. Linden’s strategy is based upon three elements: (i)
healthcare specialization, (ii) integrated private equity and operating
expertise, and (iii) its differentiated human capital program. Linden
invests in middle market platforms in the medical products, specialty
distribution, pharmaceutical, and services segments of healthcare. Since
its founding, Linden has invested in over 40 healthcare companies
encompassing over 325 total transactions. <b>The firm has approximately $8
billion in regulatory assets under management</b>. For more information,
please visit <a href="http://www.lindenllc.com/" rel="noopener noreferrer" target="_blank" title="Visit website www.lindenllc.com (opens in new window)">www.lindenllc.com</a>.<b></b></p>
<p tabindex="0"><b>About Ontario Teachers’:</b></p>
<p tabindex="0">Ontario Teachers' Pension Plan Board is a global
investor with net assets of $249.8 billion as at June 30, 2023. We
invest in more than 50 countries in a broad array of assets including
public and private equities, fixed income, credit, commodities, natural
resources, infrastructure, real estate and venture growth to deliver
retirement income for 336,000 working members and pensioners.</p>
With offices in Toronto, London, Hong Kong, Singapore,
Mumbai, San Francisco, New York, Dallas, and São Paolo, our more than
400 investment professionals bring deep expertise in a broad range of
sectors and industries. We are a fully funded defined benefit pension
plan and have earned an annual total-fund net return of 9.4% since the
plan's founding in 1990. At Ontario Teachers', we don't just invest to
make a return, we invest to shape a better future for the teachers we
serve, the businesses we back, and the world we live in. For more
information at <a href="https://www.otpp.com/en-ca/" title="Visit webpage Ontario Teachers' Pension Plan | OTPP">www.otpp.com</a>., visit <a href="https://www.otpp.com/en-ca/" title="Visit webpage Ontario Teachers' Pension Plan | OTPP">otpp.com</a> and follow us on <a href="https://linkedin.com/company/otpp/" rel="noopener noreferrer" target="_blank" title="Visit website linkedin.com (opens in new window)">LinkedIn</a>.</blockquote><p></p><p>There isn't much on this initiative but it's an interesting platform which will be headed by Dr. John Potthoff featured above.</p><p>I think the key passage in the press release was this by Ms. Keegan: "We
recognize the inefficiencies and shortcomings of clinical research
services that impact patients, research sites, sponsors, and regulators,
leading to delays in getting critical therapies to patients in need.
Our commitment is to address these challenges head-on and catalyze
positive change in our industry."</p><p>Having participated in a few clinical trials looking at potential therapies for multiple sclerosis, I can tell you that trials are expensive, full of delays, bureaucratic nightmares for clinicians and pharmaceutical companies and definitely not efficient.</p><p>So, I'm not sure exactly how this new initiative will advance clinical research but I'm all for it, we desperately need to make the entire process a lot better for patients and clinicians.</p><p>The big theme in healthcare remains an aging population that needs better treatments for a plethora of illnesses. </p><p>By teaming up with <a href="https://www.lindenllc.com/" target="_blank">Linden Capital</a>, an expert in healthcare industry, Teachers' is trying to innovate and capitalize on this new platform.<br /></p><p>Below, three years ago, <span class="style-scope ytd-text-inline-expander" id="snippet-text"><span class="yt-core-attributed-string yt-core-attributed-string--white-space-pre-wrap" role="text"><span class="yt-core-attributed-string--link-inherit-color" style="color: #131313;">Elligo Health Research CEO, John Potthoff, Ph.D., sat down with Lisa Henderson, Editorial Director at Applied Clinical Trials for an interview discussing the effect of COVID-19 on the clinical trials landscape. </span></span></span></p><p><span class="style-scope ytd-text-inline-expander" id="snippet-text"><span class="yt-core-attributed-string yt-core-attributed-string--white-space-pre-wrap" role="text"><span class="yt-core-attributed-string--link-inherit-color" style="color: #131313;">In another interview, Dr. </span></span></span><span class="yt-core-attributed-string yt-core-attributed-string--white-space-pre-wrap" role="text"><span class="yt-core-attributed-string--link-inherit-color" style="color: #131313;">John Potthoff, Elligo Health Research, talks about changing the paradigm of clinical trial recruitment.</span></span><span class="style-scope ytd-text-inline-expander" id="snippet-text"><span class="yt-core-attributed-string yt-core-attributed-string--white-space-pre-wrap" role="text"><span class="yt-core-attributed-string--link-inherit-color" style="color: #131313;"> </span></span></span></p><p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/Th5jSmeaWmo?si=rDBsde2whnAWL3JL" title="YouTube video player" width="640"></iframe></p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/y8_-GpQLAM4?si=UTRXq2H4RAsFy_sF" title="YouTube video player" width="640"></iframe>Leo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.com0tag:blogger.com,1999:blog-5879608286191780679.post-883223983784097892024-02-07T18:48:00.003-05:002024-02-07T19:54:49.517-05:00CPP Investments Catapults Into California's Energy Transition Market<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhLqKim-BD_MWaJvyzPk1oTs-Eyx8Y_39Y1wOI9jd60ChQKdjaSfbq68ttb68JHnlx1SXpKtW6twTJL8g8yDxPLCwRIuLjw0qdxPJKUEV53d2g0szRmKwsAwbrT97fPrYdviu0V4IjOm39gEukZk-NZsezoS7aNReSKCnuR8OAZA1tzO8xQCcEQim2SKtDP/s594/CRC%20CEO.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="594" data-original-width="389" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhLqKim-BD_MWaJvyzPk1oTs-Eyx8Y_39Y1wOI9jd60ChQKdjaSfbq68ttb68JHnlx1SXpKtW6twTJL8g8yDxPLCwRIuLjw0qdxPJKUEV53d2g0szRmKwsAwbrT97fPrYdviu0V4IjOm39gEukZk-NZsezoS7aNReSKCnuR8OAZA1tzO8xQCcEQim2SKtDP/w263-h400/CRC%20CEO.jpg" width="263" /></a></div>Elizabeth Elkin of Bloomberg <a href="https://www.bnnbloomberg.ca/california-resources-to-buy-aera-energy-in-2-1-billion-deal-1.2032017" target="_blank">reports</a> California Resources to buy Aera Energy in $2.1 billion deal:<p></p><p></p><blockquote><p>Oil producer California Resources Corp. will buy Aera Energy LLC in a
deal that values the company at about $2.1 billion, including debt,
building its drilling portfolio in the Western state.</p><p><b>The combined
company will be the largest oil and gas company in California by
production, according to a statement announcing the all-stock deal.
California Resources rose as much as 8.4% on the news, the biggest
intraday spike in nearly a year.</b></p><p></p><p>The
Golden State has fallen out of favor with many international oil giants
as the strictest environmental laws in the country make it harder to
drill new wells there. Output in California has been falling for years
even as other US basins are still enjoying growth. The transaction will
add large, producing assets to the driller’s portfolio, with executives
eyeing opportunities to eventually increase oil recovery at the combined
company.</p><p>It’s been a busy several months for dealmakers in the
domestic oil and gas industry, which has seen multiple billion-dollar
takeovers as companies flush with cash from the post-pandemic run-up in
oil prices look to secure new places to drill.</p><p>Oil executives have
also been facing pressure from investors to maintain buybacks and
dividends. California Resources said it expects to increase its
quarterly dividend once the deal closes.</p><p>The company will issue
21.2 million shares of common stock to the equity owners of Aera, which
is owned by entities managed by German asset management group IKAV and
Canada Pension Plan Investment Board. Former Aera joint-venture owners
Shell Plc and Exxon Mobil Corp. sold their stakes to IKAV in 2022.
California Resources, which was spun off from Occidental Petroleum Corp.
in late 2014, filed for bankruptcy in 2020 amid low oil prices,
emerging from the process later that year. </p><p>The transaction is expected to close in the second half of 2024.</p></blockquote><p>Sourasis Bose of the Globe and Mail also <a href="https://www.theglobeandmail.com/business/article-california-resources-to-buy-aera-energy-to-boost-oil-production/" target="_blank">reports</a> California Resources to buy Aera Energy to boost oil production:</p><p class="gmail-c-article-body__text gmail-text-pr-5"></p><blockquote><p class="gmail-c-article-body__text gmail-text-pr-5">California
Resources said on Wednesday it would buy Aera Energy, in a deal valuing
the company at $2.1 billion including debt, as the U.S. oil and gas
firm looks to more than double its production.</p><p class="gmail-c-article-body__text gmail-text-pr-5">The
combined entity will own interests in five of the largest oil fields in
California and its 2024 production is estimated to average 150,000
barrels of oil equivalent per day, California Resources said.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>The
deal also unlocks significant carbon capture and storage (CCS)
potential, the company said, as it plans to add around 54 million metric
tons of CCS pore space in the San Joaquin basin following the deal’s
close.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>“It enhances scale
across both the upstream and carbon management businesses, with the
potential for material synergies,” said Mark Viviano, managing partner
and lead portfolio manager at Kimmeridge.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>“CRC is uniquely positioned to capitalize on an energy transition that will require net zero oil production,” he added.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>Aera
is currently owned by German asset manager IKAV and Canada Pension Plan
Investment Board. It was started as a joint venture of oil majors Exxon
Mobil and Shell and was sold to IKAV for $4 billion in 2022.</b></p><p class="gmail-c-article-body__text gmail-text-pr-5">California Resources is paying a very reasonable price for the assets, brokerage Roth MKM’s analysts said.</p><p class="gmail-c-article-body__text gmail-text-pr-5">The Long Beach, California-based company said it would issue 21.2 million common shares to the equity owners of Aera.</p><p class="gmail-c-article-body__text gmail-text-pr-5">The
company said the deal, expected to close in the second half of 2024,
would immediately add to some financial metrics this year and reflect a
45% improvement in its operating cash flow per share. California
Resources’ board also authorized a 23% increase in share buyback to
$1.35 billion. Shares of the company were up about 12% in afternoon
trade.</p><p class="gmail-c-article-body__text gmail-text-pr-5"><b>Oil production in
California has been on a steady decline for nearly four decades. New
drilling permits have steadily declined since Gavin Newsom became
governor in 2019.</b></p><div class="gmail-BaseAd__StyledRootBaseAd-sc-1khlkqq-1 gmail-l-media"><div class="gmail-c-ad gmail-c-ad--inline gmail-c-ad--oneX4" id="gmail-c-ad--oneX4-gpt-0"><div class="gmail-c-ad__wrapper"><div class="gmail-c-ad__image" id="gmail-oneX4-gpt-0"></div></div></div></div><p class="gmail-c-article-body__text gmail-text-pr-5">The value of the deal does not contemplate incremental permits, a California Resources executive said in an analyst call.</p></blockquote><p class="gmail-c-article-body__text gmail-text-pr-5"></p><p>Earlier today, CPP Investments issued a <a href="https://www.cppinvestments.com/newsroom/cpp-investments-to-acquire-common-stock-in-california-resources-corporation-through-aera-energy-merger/" target="_blank">press release</a> stating it will acquire common stock in California Resources Corporation through Aera Energy merger:</p><p><b></b></p><blockquote><p><b>Toronto, CANADA (February 7, 2024) – </b>Canada Pension Plan Investment Board (<a aria-label="link tag 4" href="https://www.cppinvestments.com/">CPP Investments</a>)
today announced certain affiliates of CPP Investments have signed a
definitive agreement providing for a proposed merger of Aera Energy, LLC
(<u>Aera Energy</u>), and California Resources Corporation (NYSE: CRC),
<b>an independent energy and carbon management company committed to the
energy transition</b>. The transaction values Aera Energy at approximately
$2.1 billion, inclusive of Aera Energy’s net debt. CPP Investments will
<b>receive newly issued shares of common stock in the combined company upon
the close of the transaction that, at current valuations, is expected
to represent approximately 11.2% of the combined company.</b>
</p><p><b>CRC is an independent energy and carbon management company committed
to energy transition. Aera Energy is one of California’s major energy
producers and a leading developer of carbon management projects.
Together, this combination is expected to create a leader in
California’s energy transition, producing low carbon intensity fuels
that California needs while accelerating the decarbonization of the
state’s industrial and energy industries.</b></p>
<p><b>“This transaction provides CPP Investments with an excellent
opportunity to scale up our investment in California’s energy
transition, with Aera Energy and CRC both aligned in their commitment to
enabling new carbon management solutions and each bringing
complementary strengths to the table,” said Bill Rogers, Managing
Director, Global Head of Sustainable Energies, CPP Investments. “The
combined company is set to play a leading role in California’s energy
transition, which we view as a promising source of long-term
risk-adjusted returns for the CPP Fund.”</b></p>
<p>IKAV, which owns a 51% equity interest in Aera Energy, will also
become a shareholder of the combined company. CPP Investments has held a
49% equity interest in Aera Energy since February 2023.</p>
<p>The transaction is expected to close in the second half of 2024,
subject to customary closing conditions, regulatory approvals and CRC
shareholder approval.</p>
<p><b>The Sustainable Energies group pursues investments in renewable and
conventional energy, carbon capture, distributed and energy services,
emerging and disruptive technologies, as well as agriculture. As at
September 30, 2023, the Sustainable Energies group portfolio totalled
C$31 billion in net assets.</b></p>
<p><b>About CPP Investments</b></p>
<p>Canada Pension Plan Investment Board (CPP Investments™) is a
professional investment management organization that manages the Fund in
the best interest of the more than 21 million contributors and
beneficiaries of the Canada Pension Plan. In order to build diversified
portfolios of assets, investments are made around the world in public
equities, private equities, real estate, infrastructure and fixed
income. Headquartered in Toronto, with offices in Hong Kong, London,
Luxembourg, Mumbai, New York City, San Francisco, São Paulo and Sydney,
CPP Investments is governed and managed independently of the Canada
Pension Plan and at arm’s length from governments. At September 30,
2023, the Fund totalled C$576 billion. For more information, please
visit <a aria-label="link tag 5" href="http://www.cppinvestments.com/">www.cppinvestments.com</a> or follow us on <a aria-label="link tag 6" href="https://www.linkedin.com/company/cppinvestments/">LinkedIn</a><u>, </u><a aria-label="link tag 7" href="https://www.instagram.com/cppinvestments/">Instagram</a> or on X <a aria-label="link tag 8" href="https://twitter.com/cppinvestments">@CPPInvestments</a>.</p></blockquote><p></p><p>Now, for a little backgrounder, I suggest you read my comment on <a href="http://pensionpulse.blogspot.com/2023/03/cpp-investments-ikav-aera-energy-and.html" target="_blank">CPP Investments, IKAV, Aera Energy and how the world really works</a>.</p><p>Importantly, CPP Investments worked with its partner IKAV to acquire Aera and I noted this:</p><p></p><blockquote><p>Aera Energy is California’s second-largest oil and gas
producer and accounts for nearly 25% of the state’s production and the
new owners (IKAV and CPP Fund) plan to use renewable power across the
company’s
acreage. </p><p>As stated in the first article, it will also repurpose certain legacy oil and gas
infrastructure to facilitate carbon capture and storage capabilities.</p></blockquote><p></p><p>Now, <a href="https://www.crc.com/about-crc/default.aspx" target="_blank">California Resources Corporation</a> which specializes in carbon management and energy transition will acquire Aera from IKAV and CPP Investments which will receive newly issued shares of common stock in the combined company upon
the close of the transaction that, at current valuations, is expected
to represent approximately 11.2% of the combined company. <br /></p><p>Bill Rogers, Managing Director, Global Head of Sustainable Energies, CPP Investments, states this in the press release:</p><p></p><blockquote>“This transaction provides CPP Investments with an excellent opportunity
to <b>scale up our investment in California’s energy transition</b>, with Aera
Energy and CRC both aligned in their commitment to enabling new carbon
management solutions and each bringing complementary strengths to the
table. The combined company is set to play a
leading role in California’s energy transition, which we view as a
promising source of long-term risk-adjusted returns for the CPP Fund.”</blockquote><p></p><p>Remember, energy transition is an important theme at CPP Investments and all of Canada's large pension funds. They want to be early leaders here and scale up opportunities to benefit from the decarbonization of the US and global economy. </p><p>That's where the puck is headed and the more you read about <span class="ContentPaneDiv"><span class="ContentPaneDiv2"><a href="California Resources Corporation" target="_blank">California Resources Corporation</a>, the more you'll understand why CPP Investments and IKAV struck gold on this deal.</span></span></p><p><span class="ContentPaneDiv"></span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQKZznxkQQ-srNF21ty5ZWP0zWxxiqcH1sOp3Li7Z_tsRhK8uGGZx8TwXeCLd3-wsEkqYznEslkJYcUsMeObW0nxmWhgTLPrbdYrks06ruN94J-oXn3HUsoQLMqRUIKc9suUVRvdoRzR0m301BPaAoyvcxN0UVyRS9UYpuleMEWJP8K9UbMW8T-HoqRhM3/s1270/About%20CRC.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="700" data-original-width="1270" height="352" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQKZznxkQQ-srNF21ty5ZWP0zWxxiqcH1sOp3Li7Z_tsRhK8uGGZx8TwXeCLd3-wsEkqYznEslkJYcUsMeObW0nxmWhgTLPrbdYrks06ruN94J-oXn3HUsoQLMqRUIKc9suUVRvdoRzR0m301BPaAoyvcxN0UVyRS9UYpuleMEWJP8K9UbMW8T-HoqRhM3/w640-h352/About%20CRC.jpg" width="640" /></a></div><span class="ContentPaneDiv2"> </span><p></p><p><span class="ContentPaneDiv"><span class="ContentPaneDiv2">I also think it is worth reading this <a href="https://www.crc.com/about-crc/message-from-the-ceo/default.aspx" target="_blank">message</a> from its CEO </span></span><span class="ContentPaneDiv"><span class="ContentPaneDiv1">Francisco J. Leon (featured above): </span></span><span class="ContentPaneDiv1"></span></p><p></p><blockquote><p>Looking
ahead in 2023 and beyond, I am excited to be a part of the next chapter
of California Resources Corporation (CRC) in my new role as President
and Chief Executive Officer. I have been in the energy industry for more
than 20 years and with CRC since its inception in 2014, having most
recently served as the company’s Chief Financial Officer. I am honored
to now have the opportunity to lead CRC as we continue to advance the
energy transition and meet California’s ambitious climate goals.</p>
<p><b>As CEO, my business goals are to enhance CRC’s long-term value,
deliver strong shareholder returns and maximize cash flow per share of
the business. I am also committed to maintaining our company’s high
operational and safety standards that we have achieved and been
recognized for over the years. In our efforts to mitigate climate
change, we are also laser focused on investing in and growing our carbon
management business to help California achieve carbon neutrality by
2045 while benefiting the environment, working families and all parts of
our society.</b></p>
<p><b>To help California achieve these goals, we are leading the way in
pursuing several decarbonization initiatives across the state, such as</b>
<b>Carbon TerraVault (CTV) and the California Direct Air Capture (DAC) Hub</b>.
CTV is engaged in developing carbon capture and storage (CCS) projects
that safely capture, transport and inject carbon dioxide (CO<sub>2</sub>)
from industrial sources into depleted underground reservoirs for
permanent storage. <b>CTV has also assembled a consortium of more than 40
diverse organizations to create the California DAC Hub – the state’s
first full-scale Direct Air Capture + Storage (DAC+S) network of
regional hubs that will capture and permanently store atmospheric CO<sub>2</sub>
using low carbon emission energy. We plan to continue expanding our
decarbonization initiatives throughout the state in close collaboration
with our diverse community stakeholders and business partners to provide
transformational economic benefits to our surrounding communities.</b></p>
<p>Today the company is in great financial health, attributable in large
part to the women and men of CRC working hard every day to build a
different kind of energy company that is providing some of the lowest
carbon intensity oil and natural gas in the US and helping California
achieve its ambitious climate goals. <b>The energy transition is ushering
in an exciting new era for the industry. Innovations in industrial
technologies are gearing us toward a more sustainable, reliable and
affordable energy supply. Additionally, the energy industry provides
excellent career opportunities for people from different backgrounds. I
am proud of CRC's sizable multicultural workforce, with nearly 40%
diverse employees working throughout all of CRC’s areas of operation.</b></p>
<p>I am very excited about the future of CRC and look forward to working
with my exceptional CRC colleagues, regulatory and government agencies,
and our esteemed business and community partners to continue to make a
positive impact in the communities where we all live and work. Speaking
on behalf of CRC, we are grateful for the continued support of our
stakeholders as we serve Californians by responsibly producing ample,
safe and reliable energy, actively promoting the conservation of water,
habitat and energy as a responsible steward of our natural resources,
and investing in low carbon initiatives that position CRC to lead the
energy transition in California and beyond. <br /></p>
<p>Sincerely, </p>
<p>Francisco J. Leon<br />President and Chief Executive Officer<br />California Resources Corporation</p></blockquote><p></p><p></p><p><span class="ContentPaneDiv"><span class="ContentPaneDiv2">I remind my readers that </span></span><span class="ContentPaneDiv1">California Resources Corporation is a publicly listed company whose shares are trading nicely since going public four years ago:<br /></span></p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjS6XPU9Bi977D57cMoMggUg5_ppG3xW03dOdbRndX05xe6amcId_XOcJG04arBclVHg-3xrbbtQMIZ5N97DvyL-0BQzTfBca5cGhVEQn97fDFC2oJW9EzrP1Bcn6-aiZlL7zofLLg6oku84s2aFJ-NkQjuvIIUnBSKO38Sn0O_LLNgnAd7GwFP7DDxQJ_p/s938/CRC%20stock.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="616" data-original-width="938" height="420" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjS6XPU9Bi977D57cMoMggUg5_ppG3xW03dOdbRndX05xe6amcId_XOcJG04arBclVHg-3xrbbtQMIZ5N97DvyL-0BQzTfBca5cGhVEQn97fDFC2oJW9EzrP1Bcn6-aiZlL7zofLLg6oku84s2aFJ-NkQjuvIIUnBSKO38Sn0O_LLNgnAd7GwFP7DDxQJ_p/w640-h420/CRC%20stock.jpg" width="640" /></a></div><span class="ContentPaneDiv"><span class="ContentPaneDiv2">Anyways, Bill Rogers and the </span></span>Sustainable Energies group at CPP Investments now manage C$31 billion in net assets and this new combined company will figure prominently in their portfolio.<p></p><p></p><p></p><p>Below, a fascinating discussion with carbon capture experts Tom McDonald, founder of Mosaic Materials, Emily Wimberger, managing partner at Hua Nani Partners, Chris D. Gould, managing director of Carbon TerraVault, and UC Davis Economics Professor David Rapson (moderator). The discussion focuses on the prospects for large-scale carbon removal via Direct Air Capture (DAC) technologies and what role they should play in shaping climate policy.</p><p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/Q1SsXkKdQFA?si=-E6u6NWCQDZaSrkR" title="YouTube video player" width="640"></iframe></p><p></p>Leo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.com0tag:blogger.com,1999:blog-5879608286191780679.post-39564759230649593082024-02-06T18:58:00.000-05:002024-02-06T18:58:54.249-05:00Vestcor Names TTC's Sean Hewitt as its New CEO<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgbNP0iC2L5Z_PoFw-Xu08Rzls4oytNw9z_Z0Z19CBJgz6HLiaWyoPyNnSWWwT7nVSia_iSh_J3mMW5vB0SspZzyFZI02JZssEh-XTy-eQg6QYrlr3cxSWQLT-50uhQaepPnGPQn6n5hE9r4HeZKoqGnslIPyq8lWxkBORnkEPiZwWEFYeO5Ll6jUhZAhLz/s800/Sean%20Hewitt.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="600" data-original-width="800" height="300" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgbNP0iC2L5Z_PoFw-Xu08Rzls4oytNw9z_Z0Z19CBJgz6HLiaWyoPyNnSWWwT7nVSia_iSh_J3mMW5vB0SspZzyFZI02JZssEh-XTy-eQg6QYrlr3cxSWQLT-50uhQaepPnGPQn6n5hE9r4HeZKoqGnslIPyq8lWxkBORnkEPiZwWEFYeO5Ll6jUhZAhLz/w400-h300/Sean%20Hewitt.jpg" width="400" /></a></div>Vestcor <a href="https://vestcor.org/en/pr022024/" target="_blank">announced</a> the appointment of Sean Hewitt as its new President and CEO:<p></p><p></p><blockquote><p>FREDERICTON – Vestcor Inc. (Vestcor), an integrated investment
management, pension and benefits administration organization providing
services to over 20 different Atlantic Canadian public sector client
groups, today announced the upcoming appointment of Mr. Sean Hewitt,
CFA, ICD.D, as its new President and Chief Executive Officer.</p>
<p>The Board of Directors of Vestcor Inc. undertook a comprehensive
search process after John Sinclair, who has successfully led the
organization for 20 years, announced his plans to retire last year.
Sinclair will remain as President and CEO at Vestcor, which has over $20
billion in investment assets under management, until Hewitt joins the
organization in mid-April.</p>
<p><b>Hewitt has nearly 20 years of progressive experience within the
pension and investment industries from across Canada. In 2016, he was
appointed to his most recent position as the inaugural Chief Executive
Officer of the Toronto Transit Commission (TTC) Pension Plan. He was
instrumental in assembling the leadership team under a new
organizational structure and developing its strategic approach. Today,
the TTC Pension Plan represents over 25,000 members and retirees, with
over $8 billion in assets under management.</b></p>
<p>“I am very pleased with the outcome of the work of our Board of
Director’s Ad-Hoc CEO Search Committee” said David Losier, Chair of
Vestcor’s Board of Directors. “Their comprehensive nationally based
search process resulted in interest from a great number of qualified
candidates who were extensively assessed by our committee. We are now
actively engaged with both John and Sean to ensure a prudent transition
and we look forward to introducing Sean to our many stakeholders in due
course.”</p>
<p><b>Tanya Chapman, Vestcor Director and Chair of the Search Committee
noted “Sean Hewitt brings a wealth of experience in the pension and
investment industry. He led the establishment of the TTC Pension Plan as
an independent organization, which had many parallels to the creation
of Vestcor Inc. Sean’s focus on establishing collaborative and
transparent culture of strong financial performance and member service
excellence mirrors the approach Vestcor continues to follow. We are
confident Sean’s experience and strategic approach will benefit Vestcor
and our clients over the long-term.”</b></p>
<p>Hewitt obtained a Bachelor of Economics from the University of
Calgary, is a CFA charterholder, and holds the ICD.D designation with
the Institute of Corporate Directors.</p>
<p>Vestcor is an independent not-for-profit company headquartered in
Fredericton, New Brunswick that provides global investment management
services and benefits administration to public sector client groups
representing 150 employer groups and more than 111,000 individuals.
Assets under management have grown from approximately $6 billion in 2003
when Sinclair assumed his leadership role to over $20 billion today.</p>
<p> </p>
<p><strong>About Vestcor</strong></p>
<p style="text-align: center;"><strong>A Partner in Creating and Delivering Sustainable Financial Security.</strong></p>
<p style="text-align: left;">Vestcor is an independent not-for-profit
company located in Fredericton, New Brunswick which provides global
investment management services to 10 different public sector client
groups representing approximately $20 billion in assets under management
as of December 31, 2022, and administration services to 11 public
sector pension plans and 4 employee benefit plans.</p>
<p>Vestcor’s team of more than 150 service professionals provides
innovative, integrated, cost-effective investment management and pension
and benefit administration services solutions to public sector
entities. Vestcor currently services the requirements of over 111,000
individual plan members and 150 participating employer groups. Further
information about Vestcor is available at <a href="https://vestcor.org/en/about-us/" rel="noopener" target="_blank">Vestcor.org</a>.</p></blockquote><p></p><p></p><p></p><p>A little background on this. </p><p>Back in July, Vestcor CEO John Sinclair <a href="https://vestcor.org/en/ceoretirement/" target="_blank">announced</a> he was stepping down after successfully leading this organization for 20 years:</p><p style="text-align: center;"></p><blockquote><p style="text-align: center;">–Sinclair Will Stay on as CEO Until Board of Directors Completes a Comprehensive Search Process–</p>
<p>Fredericton, NB —Vestcor Inc. (Vestcor), an integrated investment
management, pension and benefits administration organization providing
service to 22 different New Brunswick public sector client groups, today
announced that its Chief Executive Officer John Sinclair has informed
the Board of Directors of his intention to retire after a successful
20-year period leading the organization. Sinclair will stay on as CEO at
Vestcor, which has over $20 billion in assets under management, until a
successor is named following a Board-led executive search process
considering qualified internal and external candidates.</p>
<p><b>“On behalf of the Board of Directors and the over 150 professionals
who work at Vestcor, I want to thank John Sinclair for his commitment to
this organization and the over 111,000 pension plan and benefit program
members who have benefited greatly from his expertise and leadership
over the past two decades. His long-term vision and prudent management
have enabled Vestcor to exceed the long-term objectives of clients,”
said David Losier, Chair of Vestcor’s Board of Directors. “We appreciate
that John has accepted to stay on as CEO, supported by his strong
leadership team, until the Board completes a national search for the
next leader of this important organization, so leadership continuity is
ensured.”</b></p>
<p>Vestcor is an independent not-for-profit company headquartered in
Fredericton, New Brunswick that provides global investment management
services and benefits administration to public sector client groups
representing 140 employer groups and more than 111,000 individuals.
Assets under management have grown from approximately $6 billion in 2003
when Sinclair assumed his leadership role to over $20 billion today.</p>
<p><b>“I have been part of Vestcor for more than two decades and over that
time we have built a world class investment management and pension
services team based right here in New Brunswick for the benefit of New
Brunswickers,” said John Sinclair, CEO of Vestcor. “I want to thank my
Vestcor colleagues, our owners and stakeholders for their strong support
over the years and I will be watching with great interest as the
organization continues its steady growth in the future.”</b></p></blockquote><p></p>
<p>John and his team have done an astounding job at Vestcor, properly diversifying that portfolio across public and private assets.</p><p>That diversification helped Vescor <a href="https://vestcor.org/en/pr05112023/" target="_blank">beat its benchmark</a> despite a challenging 2022:</p><p></p><blockquote><p>Vestcor achieved overall returns of -3.63% during 2022. This is
particularly significant when compared to the median gross returns
(pre-fee) of Canadian defined benefit pension plans, which was -10.3%
for the same period, as noted in a recent report by RBC Investor &
Treasury Services (RBCITS). More importantly, Vestcor’s longer term
4-year gross annualized pension plan return was 5.99% at year-end,
comparing favourably to the 5.32% 4-year median return also reported by
RBCITS.</p>
<p>Also of significance was the return realized above clients’
investment policy benchmarks. The active management activities of
Vestcor’s highly specialized employees led to an outperformance of
client-set benchmarks by a record 2.63% during the year, adding $538
million in value to clients. These additional returns have added 1.31%
per annum or over $1 billion in investment earnings for clients during
the most recent four-year period.</p></blockquote><p></p><p> Now, in terms of what we can expect with Sean Hewitt, I'd say more of the same.</p><p>Three years ago, Benefits Canada <a href="the TTC Pension Fund Society is staying on track during the coronavirus crisis" target="_blank">published</a> a nice article on how the TTC Pension Fund Society is staying on track during the coronavirus crisis: <br /></p><div class="row"><div class="col-md-12"><p></p></div></div><blockquote><div class="row"><div class="col-md-12"><p>Since last March, the
coronavirus pandemic has derailed the best-laid plans of many
organizations, including the Toronto Transit Commission.</p><p>With so
many white-collar employees working from home, and worries about public
health, it’s no secret the TTC’s ridership and revenue have been hit
hard. Between the first and last weeks in March 2020, for example,
lockdown measures contributed to a 75 per cent decline in weekly
revenue. Cost-saving measures included temporary layoffs and a pause in
salary increases for non-unionized employees.</p></div></div><p>Despite
these stark challenges, the TTC Pension Fund Society didn’t experience
either contribution reductions or a retirement spike.</p><p>“We have a very stable contribution regime, being a jointly sponsored
pension plan, so there really hasn’t been much in the way of
contribution volatility [and] we actually saw retirements go down this
year versus the previous year. . . . That was interesting to us [and]
perhaps not totally expected,” says chief executive officer Sean Hewitt.</p><p>In
July 2020, the plan felt confident enough to announce an ad hoc cost of
living increase of 1.96 per cent, effective as of January 1, 2020, for
pensioners who retired in 2019 or earlier. “That speaks to two things:
one, how well we’ve performed through this pandemic period, and, two,
our stable contribution regime and long-term focus,” Hewitt says,
adding, “We entered into the pandemic in perhaps the best financial
position that we had been in our history as a result of very strong
returns over the last 10-plus years. That also helped.”</p><p><b>Making inroads in private debt, equity Hewitt attributes the plan’s
robust performance to a diversified portfolio, with exposure to
alternatives (especially real estate) stretching back several decades.
In addition, the plan has historically been fully invested so it was
able to benefit from the past decade’s strong returns. The road ahead
looks tougher, however.</b></p><p><b>“[In 2020], we exceeded our targets for
financial performance, but that comes with the caveat that our future
return expectations are muted and getting lower. In our view, achieving
our desired rate of return going forward will be harder . . . but we
have strategies to help combat that,” Hewitt says.</b></p><div class="ad ad-outstream-video" data-ad-network="slimcut" id="ad-outstream-video"></div><p><strong></strong></p><p><b>Because
fixed-income yields are low and getting lower, Hewitt says the plan
can’t rely on meaningful returns from its substantial allocation to
Government of Canada and provincial bonds. As a result, it has started
pivoting towards private debt and private equity. “It’s a several-year
program. We’re going slowly but methodically into those investments,” he
says. However, he cautions, “There are liquidity challenges that come
with that, so on an annual basis we review our liquidity needs and
stress test for all sorts of different circumstances.”</b></p><p>The stress
testing looks at factors ranging from contribution volatility on a
year-by-year basis to mark-to-market settlements on hedges and
capital-call requirements, and then calculates how four times the worst
results in the past 10 years would affect them.<img alt="" class="aligncenter size-full wp-image-96520 lazyloaded" data-lazy-src="https://www.benefitscanada.com/wp-content/uploads/sites/7/2021/03/Trailblazers.jpg" data-was-processed="true" height="361" src="https://www.benefitscanada.com/wp-content/uploads/sites/7/2021/03/Trailblazers.jpg" width="500" /></p><p><b>“We
build a maximum budget for illiquidity based on those factors . . . and
then we build in an additional cushion so that we can be a provider of
liquidity and invest opportunistically into very stressed markets.”</b></p><p>The
pandemic added a new threat for the TTC to build into its stress tests
and also generated volatility that made it difficult to rebalance
speedily. That’s prompted Hewitt to look at synthetic rebalancing tools
utilizing derivatives that would enable the plan to quickly take
advantage of opportunities when they present themselves.</p><p><strong></strong></p><p><b>Hewitt’s
main concern these days is that market valuations are very high across
multiple asset classes, which makes it harder to deploy capital. But, he
says, “by maintaining a long-term focus, I think we’ll be in excellent
shape going forward, despite, perhaps, some short-term volatility.”</b> <br /></p></blockquote><p>If he was concerned with market valuations back then, I can only imagine how he feels nowadays.</p><p>Anyways, let me publicly congratulate Sean Hewitt for being appointed Vestcor's next CEO and wish John Sinclair all the best as he gets set to retire.</p><p>As I said, Sean Hewitt has a good team there to lean on, including Vestcor's CIO Jon Spinney.</p><p>Below, Aswath Damodaran, NYU professor of finance, joins 'Closing Bell' to discuss the high prices of the ‘Magnificent 7’.</p><p>And Leon Cooperman, Omega Family Office chairman and CEO, joins 'Squawk Box' to discuss the latest market trends, the Fed's rate path decision, state of the economy, antisemitism on campus, 2024 race, Elon Musk, and more
<p><iframe width="640" height="360" src="https://www.youtube.com/embed/9lJG4GyRnq0?si=n3FWdnmoEd8B8GTC" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen></iframe><p> <iframe width="640" height="360" src="https://www.youtube.com/embed/rvaREX2_tuU?si=dmm3Y0GWgfOR55_Y" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen></iframe>Leo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.com0tag:blogger.com,1999:blog-5879608286191780679.post-36223680028737401642024-02-05T17:37:00.000-05:002024-02-05T17:37:46.020-05:00AIMCo Sets Up $1 Billion Energy Transition Fund<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgVhZUcIhbEZgQk5NZoiMcp3SQhwwZBmj-GI0up8mhvP3Ztp03j9LzB8kWhsVcBzgYX6Ve2J21PvnA6Nerw9sT-RSP5iWlXOlZVzomPRofnU48707m7ZxxiuVw-q5EvcmRhm0VjaOtISPOFHApiuezomf7GhIs-ruSrODOY39JlztDNdaRSSm88aBTaP2iv/s546/Carmen%20Valasquez%20-%20Photo.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="546" data-original-width="363" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgVhZUcIhbEZgQk5NZoiMcp3SQhwwZBmj-GI0up8mhvP3Ztp03j9LzB8kWhsVcBzgYX6Ve2J21PvnA6Nerw9sT-RSP5iWlXOlZVzomPRofnU48707m7ZxxiuVw-q5EvcmRhm0VjaOtISPOFHApiuezomf7GhIs-ruSrODOY39JlztDNdaRSSm88aBTaP2iv/w266-h400/Carmen%20Valasquez%20-%20Photo.jpg" width="266" /></a></div>Jeffrey Jones of the Globe and Mail <a href="https://www.theglobeandmail.com/business/article-aimco-energy-decarbonization-fund/" target="_blank">reports</a> Alberta Investment Management Corp. sets up $1-billion fund to invest in energy transition:<p></p><p class="c-article-body__text text-pr-5"></p><blockquote><p class="c-article-body__text text-pr-5">Alberta
Investment Management Co. has established a $1-billion fund to invest
in energy-transition and decarbonization opportunities, while saying it
will hang on to high-carbon assets within its portfolios.</p><p class="c-article-body__text text-pr-5">AIMCo,
which manages public-sector pensions and other endowments within the
province, said the move is part of an overall approach to climate
investing that is aimed at reducing emissions within its portfolio over
the long term. It does that by putting money into low-carbon assets but
also pushing for <a href="https://www.theglobeandmail.com/topics/greenhouse-gas/" target="_blank">greenhouse-gas</a> reductions among high emitters, it says.</p><p class="c-article-body__text text-pr-5"><b>The
new fund, called the Energy Transition Opportunities Pool, or ETOP,
will be used to invest in industrial decarbonization, carbon capture,
sustainable fuels, <a href="https://www.theglobeandmail.com/topics/renewable-energy/" target="_blank">renewable energy</a>
production, as well as electrification, energy storage and efficiency.
Many of AIMCo’s clients have dedicated funds to the pool, it said.</b></p><p class="c-article-body__text text-pr-5"><b>AIMCo
expects to make its first investments from the fund in the current
quarter, chief investment officer Marlene Puffer said in an interview.
ETOP will be an addition to its asset mix, alongside money
markets and fixed income, public equities and private markets. The
latter comprises investments in infrastructure, real estate, renewable
resources and private equity.</b></p><p class="c-article-body__text text-pr-5"><b>“We’ve
been working on this for some time in determining the right approach,
really defining the parameters, looking at its risk profile, determining
the strategy of how we’ll go about it. Then it has been a lengthy
process of consulting with our clients and helping them understand how
this fits into their portfolios,” Ms. Puffer said.</b></p><p class="c-article-body__text text-pr-5">AIMCo
invests around the world on behalf of 17 clients, which include
pensions for teachers, police, municipal workers and others. It’s also
responsible for public funds, such as the Alberta Heritage Savings Trust
Fund. As of the middle of 2023, it managed $146-billion of assets.</p><p class="c-article-body__text text-pr-5"><b>It
said it has considered the climate ramifications of its investments for
a decade, and has set up an in-house taxonomy to guide how it allocates
money to its portfolios. It categorizes investments as green, or
emission-free, through various stages of energy-transition, all the way
to “hard to abate” and a category called “black box.” Those represent
the large opportunities to make emissions cuts and improve disclosure,
said Carmen Velasquez, AIMCo’s managing director, sustainable investing.</b></p><p class="c-article-body__text text-pr-5"><b>“That’s
a place where we think we can really help, and we’ve been doing that
for a number of years,” Ms. Velasquez said. “For instance, when assets
come into the portfolio and they’re at the beginning stages of their
journey, we’ll work with them to actually help them develop their carbon
footprint [plan].”</b></p><p class="c-article-body__text text-pr-5">However,
environmental activists have criticized AIMCo for not setting a
net-zero emissions target, in contrast with some other large Canadian
pension managers, including Ontario Teachers’ Pension Plan, Canada
Pension Plan, Ontario Municipal Employees Retirement System and Caisse
de dépôt et placement du Québec. AIMCo has also resisted calls to divest
holdings in the oil and gas industry and other high-carbon sectors.</p><p class="c-article-body__text text-pr-5">Indeed, <a href="https://www.theglobeandmail.com/business/article-aimco-looking-to-invest-in-trans-mountain-pipeline-as-expansion/" target="_blank">it has studied making an investment in the Trans Mountain oil pipeline</a>, which Ottawa is planning to divest, AIMCo chief executive officer Evan Siddall said last week.</p><div class="BaseAd__StyledRootBaseAd-sc-1khlkqq-1 l-media"><div class="c-ad c-ad--inline c-ad--oneX4" id="c-ad--oneX4-gpt-0"><div class="c-ad__wrapper"><div class="c-ad__image" id="oneX4-gpt-0"></div></div></div></div><p class="c-article-body__text text-pr-5">It
has responded by saying that maintaining ownership of such companies
gives it sway to influence boards of directors to improve their
environmental performance. As such, it is a member of the Climate Action
100+ and Climate Engagement Canada, groups of institutional investors
that seek to persuade companies to bolster their climate-related
disclosures and emissions reductions.</p><p class="c-article-body__text text-pr-5"><b>“If
we green things that are already green, what’s the impact of that? But
if you can reduce the emissions of a high-emitting asset by 1 per cent,
the impact from an emissions standpoint is much higher,” Ms. Velasquez
said. “So that’s been a lot of our drive, and part of it, too, is just
the opportunity that’s in front of us.”</b></p><p class="c-article-body__text text-pr-5"><b>That includes investments in such fields as transport, agriculture and health, among others, she said.</b></p><p class="c-article-body__text text-pr-5">AIMCo
is supportive of portfolio companies setting plans to get to net-zero
emissions, but has so far not taken that step itself. Mr. Siddall has
said the larger need is to balance energy supply and emissions
reductions, <b>and he is unable to make that commitment without seeing a
clear path to achieve it.</b></p><p class="c-article-body__text text-pr-5"><b>The
organization is in charge of portfolios for several clients, all of
which are at different stages of defining their own goals, Ms. Velasquez
said.</b></p><p class="c-article-body__text text-pr-5"><b>“Part of our role is
to advise them and to lead them on this topic, so for now that is where
we are. But we are very much in service of decarbonization, and that is
part of why we wanted to put this out today,” she said.</b></p></blockquote><p class="c-article-body__text text-pr-5"></p><p class="c-article-body__text text-pr-5">The Canadian Press also <a href="https://calgaryherald.com/business/aimco-1-billion-fund-energy-transition-opportunities" target="_blank">reports</a> AIMCo sets up fund worth $1 billion to invest in energy transition opportunities:</p><p class="c-article-body__text text-pr-5"></p><blockquote><p class="c-article-body__text text-pr-5"> The <a data-evt-typ="click" data-evt-val="{"control_fields": {"mparticle": {"keys": {"click_source_type": "click_source_type", "anchor_text": "anchor_text", "target_url": "target_url", "layout_section": "layout_section"}, "mp_event_type": "Navigation", "extra_keys": ["click_vertical_position_percentage", "click_vertical_position_pixels"]}}, "click_source_type": "in-page link", "anchor_text": "Alberta Investment Management Corp.", "target_url": "https://calgaryherald.com/tag/aimco/", "layout_section": "in-page-link"}" data-evt="click" href="https://calgaryherald.com/tag/aimco/" rel="noopener noreferrer" target="_blank">Alberta Investment Management Corp.</a> has set up a new $1-billion fund dedicated to investing in the global energy transition and decarbonization sectors.</p><p>The
investment manager says the money represents new capital and
investments made through the fund will be in addition to its other
climate-related investments across asset classes.</p><p></p><div class="js-widget-content article-content__widget-group article-content__widget-group--content-slot6"></div><div class="visually-hidden"></div><p><b>AIMCo
chief investment officer Marlene Puffer says it has been strategically
evaluating climate change risks and opportunities for the last decade
and the organization has a strong track record of making investments in
the energy transition space.</b></p><p data-async=""><b>AIMCo says the
new fund will look to offer exposure to a range of energy transition
opportunities such as industrial decarbonization, <a data-evt-typ="click" data-evt-val="{"control_fields": {"mparticle": {"keys": {"click_source_type": "click_source_type", "anchor_text": "anchor_text", "target_url": "target_url", "layout_section": "layout_section"}, "mp_event_type": "Navigation", "extra_keys": ["click_vertical_position_percentage", "click_vertical_position_pixels"]}}, "click_source_type": "in-page link", "anchor_text": "carbon capture and sequestration", "target_url": "https://calgaryherald.com/tag/carbon-capture-utilization-and-storage/", "layout_section": "in-page-link"}" data-evt="click" href="https://calgaryherald.com/tag/carbon-capture-utilization-and-storage/" rel="noopener noreferrer" target="_blank">carbon capture and sequestration</a>.</b></p><p><b>Other
areas could include renewable fuels, low-carbon renewable energy
production and related technologies and electrification, storage and
energy efficiency.</b></p><p></p><p>AIMCo invests on behalf of pension,
endowment, insurance and government funds in Alberta and has more than
$158 billion in assets under management.</p></blockquote><p class="c-article-body__text text-pr-5">Last week, AIMCo outlined its approach to climate investing and issued a <a href="https://www.aimco.ca/insights/new-fund-for-energy-transition" target="_blank">press release</a> going over its new $1 billion fund created to invest in energy transition opportunities:</p><p class="c-article-body__text text-pr-5"></p><blockquote><p class="c-article-body__text text-pr-5">The Alberta Investment Management Corporation (AIMCo) today outlined
its approach to climate investing. It also introduced its Energy
Transition Opportunities Pool (ETOP), which is a $1 billion fund
dedicated to investing in the global energy transition and
decarbonization sectors.</p><p><b>“AIMCo has been strategically evaluating
climate change risks and opportunities for the last decade and the
organization has a strong track record of making investments in the
energy transition space,” said Marlene Puffer, Chief Investment Officer,
AIMCo. “Our climate approach provides important transparency around how
we consider climate in our investments and how we will, over the long
run, help reduce emissions.”</b></p><p>AIMCo’s climate approach includes the
introduction of a <b>climate taxonom</b>y that evaluates and classifies the
energy transition readiness and carbon intensity of existing and new
investments. This tool helps the investment teams analyze climate risk
within client portfolios, as well as measure and improve total portfolio
transition readiness. </p><h3>Energy Transition Opportunities Pool (ETOP)</h3><p><b>The
initial $1 billion in AIMCo’s ETOP represents new capital. The
investments made through ETOP will be in addition to AIMCo’s other
climate-related investments across asset classes. </b>Many of AIMCo’s
clients have allocated funds to the new pool, which will offer them
exposure to a variety of energy transition opportunities and themes,
including:</p><ul><li><p><b>Industrial decarbonization, carbon capture and sequestration</b></p></li><li><p><b>Sustainable solutions and renewable fuels </b></p></li><li><p><b>Low-carbon renewable energy production and related technologies </b></p></li><li><p><b>Electrification, storage and energy efficiency </b></p></li></ul><p>“We
are gratified by our clients’ commitment both to the new pool and to
our shared objective of supporting and benefiting from energy transition
and decarbonization opportunities,” said Ben Hawkins, Executive
Managing Director, Head of Infrastructure & Renewable Resources.</p><p>For more information about the climate approach and the ETOP, please click <a class="hyperlink external-link" href="https://assets.ctfassets.net/lyt4cjmefjno/7zQMoDXZ9ZMgu04tetEk9j/55a585a8a39017d90966197c5cc94472/AIMCo_Climate_Approach.pdf" target="_blank">here</a>.</p><p></p><h3>About AIMCo</h3><p>AIMCo
is one of Canada’s largest and most diversified institutional
investment managers with more than CAN$158 billion of assets under
management. AIMCo invests globally on behalf of pension, endowment,
insurance, and government funds in the Province of Alberta. AIMCo
manages approximately 30 pools of capital on behalf of these clients.
With offices in Edmonton, Calgary, Toronto, London, Luxembourg, and
Singapore our more than 200 investment professionals bring deep
expertise in a range of sectors, geographies, and industries. <br /></p></blockquote><p class="c-article-body__text text-pr-5">I would urge my readers to click <a class="hyperlink external-link" href="https://assets.ctfassets.net/lyt4cjmefjno/7zQMoDXZ9ZMgu04tetEk9j/55a585a8a39017d90966197c5cc94472/AIMCo_Climate_Approach.pdf" target="_blank">here</a> to learn more about AIMCo's climate approach and how the ETOP will function in practice.</p><p class="c-article-body__text text-pr-5">It's important to note that AIMCo has been taking sustainable finance very seriously and the introduction of this new ETOP Fund just adds another dimension to its portfolio:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj1hbKTfsA2GueX_AGhPdrbj_cMUSQqaeVH6tH7n1fs_zb49FXnkOEfSzNYn3HIeVROTkQVFWhKnYoP8MldVfDJ8A53pDR4BRPa31tjQFT1XUA0Vgzs4-5GFFfPTfF85Txi5c7maM5Xg7ntFO71dN6LoAktQwNm8UYPEoWH1YgU2SbwncHiLfPEU8MBeUSj/s858/AIMCo-portfolio%20progress.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="370" data-original-width="858" height="276" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj1hbKTfsA2GueX_AGhPdrbj_cMUSQqaeVH6tH7n1fs_zb49FXnkOEfSzNYn3HIeVROTkQVFWhKnYoP8MldVfDJ8A53pDR4BRPa31tjQFT1XUA0Vgzs4-5GFFfPTfF85Txi5c7maM5Xg7ntFO71dN6LoAktQwNm8UYPEoWH1YgU2SbwncHiLfPEU8MBeUSj/w640-h276/AIMCo-portfolio%20progress.jpg" width="640" /></a></div><p>Moreover, AIMCo's climate taxonomy is rooted in three key principles:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiYLEY4ikcM5LG1Ku93esy_Bmh3I9LXOedD_le6M1t1C0RoRlZWuMVU9L1QOlaZ3f4N5ClXF5xF52eXpR8EltlrByGiXxobQQbz5_3cqHzOKlrBYH-25nMFFjYYM3yDAxN_2jguiCHdfUmPC3knaYRxXbF9VWe1kb4C7gLaDZvbk91umBUAvt-DSGuMVJDP/s821/AIMCo-climate%20taxonomy.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="556" data-original-width="821" height="434" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiYLEY4ikcM5LG1Ku93esy_Bmh3I9LXOedD_le6M1t1C0RoRlZWuMVU9L1QOlaZ3f4N5ClXF5xF52eXpR8EltlrByGiXxobQQbz5_3cqHzOKlrBYH-25nMFFjYYM3yDAxN_2jguiCHdfUmPC3knaYRxXbF9VWe1kb4C7gLaDZvbk91umBUAvt-DSGuMVJDP/w640-h434/AIMCo-climate%20taxonomy.jpg" width="640" /></a></div><p>And the climate approach in terms of transition assets is clearly defined:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgdBOe75tFYpKGvamNZLE14lXaKc31Y0iHkRGUOS3RArXVoJoye89wSmZ_XivxZrC3KAEJ0G5XfoePdIgiQOASu4U7PS8oibrfoMAbIRAz4UH55mPm9wKJDmEqWF_GKyf9pa3cJUk5lu8W8BDL1xGorZXjbf_qjFa_Oo25_gFzjfCKI6TaVNtwP1Glry90R/s928/AIMCo-climate%20approach.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="784" data-original-width="928" height="540" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgdBOe75tFYpKGvamNZLE14lXaKc31Y0iHkRGUOS3RArXVoJoye89wSmZ_XivxZrC3KAEJ0G5XfoePdIgiQOASu4U7PS8oibrfoMAbIRAz4UH55mPm9wKJDmEqWF_GKyf9pa3cJUk5lu8W8BDL1xGorZXjbf_qjFa_Oo25_gFzjfCKI6TaVNtwP1Glry90R/w640-h540/AIMCo-climate%20approach.jpg" width="640" /></a></div><p></p><p>And AIMCo already invests in decarbonization projects:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjt70_1fMFrXS5xB5eOd6KUt2OpPVO1MWJ30POtA9-2O_TwPe8ENJCoEcxJbTpwwflgiFBPRZuIMQo6mq34AaX7EpYZqEEGhtEcASAwh2G0y_1dBZdO3yYXc3_gVpEpc03EFp7E7bpOdOpjXBtfysYXJo5tAsc737p8YRWNimkTnkHb9VY58neB12w90JM5/s861/AIMCo%20invests%20in%20decarbonization.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="861" data-original-width="731" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjt70_1fMFrXS5xB5eOd6KUt2OpPVO1MWJ30POtA9-2O_TwPe8ENJCoEcxJbTpwwflgiFBPRZuIMQo6mq34AaX7EpYZqEEGhtEcASAwh2G0y_1dBZdO3yYXc3_gVpEpc03EFp7E7bpOdOpjXBtfysYXJo5tAsc737p8YRWNimkTnkHb9VY58neB12w90JM5/w544-h640/AIMCo%20invests%20in%20decarbonization.jpg" width="544" /></a></div><p></p><p>Now, in terms of the $1 billion energy transition fund, I note this:</p><p></p><blockquote><p>
In consultation with clients, AIMCo has
established an Energy Transition Opportunities
Pool (ETOP). With many clients allocating to
the pool, more than $1 billion will be deployed
to capitalize on the tailwinds of the global
energy transition and decarbonization sectors.
<b>This approach is additive to the efforts we
already make on climate investing across
asset classes</b>.</p><p>
<b>By investing in ETOP, clients can seize the
early-mover advantage, allowing them to
capitalize on growing transition opportunities
at scale.</b> Its strategy is to complement existing
products and concentrate investments
in opportunities that may not be able to
be leveraged within existing asset class
mandates, enhancing clients’ overall
investment strategies.</p><p>
Due to the far-reaching effects of the energy
transition and evolving innovation, ETOP
investments will offer clients exposure to a
variety of energy transition opportunities and
themes, including, but not limited to:</p><ul style="text-align: left;"><li>Industrial decarbonization, carbon capture
and sequestration </li><li>Sustainable solutions and renewable fuels </li><li>Low-carbon renewable energy production
and related technologies </li><li>Electrification, storage, and energy
efficiency </li></ul></blockquote><p>Clearly AIMCo didn't set up ETOP for fun and scoring points with environmentalists, it sees opportunities in the energy transition space and wants its clients to invest in them to make returns over the long run.</p><p>As I've been stating many times, energy transition is fraught with risks and opportunities and it's up to AIMCo and other large Canadian pension funds to navigate this space judiciously to capture these opportunities and mitigate risks.</p><p>Ben Hawkings, Head of Infrastructure & Renewable Resources, and his team will be in charge of this new fund and I'm certain they are already preparing to make new investments as opportunities arise.</p><p>Carmen Velasquez, AIMCo’s Managing Director, Sustainable Investing (featured above), and her team have done a great job outlining AIMCo's climate strategy and I would recommend you read AIMCo's Stewardship Report and other reports <a href="https://www.aimco.ca/insights/tags/responsible-investment" target="_blank">here</a>.</p><p>She clearly states where AIMCo can offer value in the energy transition space working alongside companies that are looking to lower their carbon footprint and add value:<br /></p><p></p><blockquote>“That’s
a place where we think we can really help, and we’ve been doing that
for a number of years,” Ms. Velasquez said. “For instance, when assets
come into the portfolio and they’re at the beginning stages of their
journey, we’ll work with them to actually help them develop their carbon
footprint [plan].”</blockquote><p></p><p>Alright, let me wrap it up there, feeling a bit tired today and need to eat and rest tonight.</p><p>Below, once again, Evan Siddall, CEO of the Alberta Investment Management Corporation
(AIMCo), <a href="https://www.bnnbloomberg.ca/video/aimco-ceo-evan-siddall-on-why-his-pension-fund-will-always-be-significant-investors-in-canada~2854193" target="_blank">joins</a> BNN Bloomberg to talk about the investing landscape for
pension funds in Canada. He says Canada is currently attractive but
needs more incentives to attract more Canadian national and foreign
buyers.</p><p>
</p><p><iframe allow="autoplay; clipboard-write; encrypted-media; picture-in-picture" allowfullscreen="" frameborder="0" height="360" src="https://embed.jasperplayer.com?brand=BNN&destination=bnn_web&language=EN&contentId=2854193" width="640"></iframe></p><p> </p><p></p><p></p><p></p>Leo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.com0tag:blogger.com,1999:blog-5879608286191780679.post-58721186303022888122024-02-02T17:41:00.003-05:002024-02-03T08:17:06.666-05:00Another Blowout Jobs Report: Have We Entered The Monetary Metaverse?<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgr6TuenbSkn1mNpczRR-Dz4W2nM3x211B4HfuZm-zLyq-q7K5nZVoyU7JqWt92cwV0bvRuquvQ-JmW8-aNkyG548SxZsM94iF8uqmkyMCxwlOBKx-cZVTaMBiMV9_MjuuigFjV6HDhqWsBe_1GjAhFY-3eVqhJONLwdlc7U2QoKbXG1yb_C9lSmWr4oCFQ/s491/Oprah.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="365" data-original-width="491" height="297" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgr6TuenbSkn1mNpczRR-Dz4W2nM3x211B4HfuZm-zLyq-q7K5nZVoyU7JqWt92cwV0bvRuquvQ-JmW8-aNkyG548SxZsM94iF8uqmkyMCxwlOBKx-cZVTaMBiMV9_MjuuigFjV6HDhqWsBe_1GjAhFY-3eVqhJONLwdlc7U2QoKbXG1yb_C9lSmWr4oCFQ/w400-h297/Oprah.png" width="400" /></a></div>Brian Evans and Lisa Kalia Han of CNBC <a href="https://www.cnbc.com/2024/02/01/stock-market-today-live-updates.html" target="_blank">report</a> the S&P 500 closes at a record, rises for a fourth-straight week on strong tech earnings:<p></p><p></p><blockquote><p>The <span class="QuoteInBody-quoteNameContainer" data-test="QuoteInBody" id="LiveBlogArticle-QuoteInBody-1">S&P 500 </span>notched a fresh record high on Friday as quarterly results from
technology companies including Facebook-parent Meta topped expectations
and the January jobs report came in much better than expected.</p><p>The broad market index added 1.1% to close at 4,958.61, above its previous record close of 4,927.93 reached on Monday. The <span class="QuoteInBody-quoteNameContainer" data-test="QuoteInBody" id="LiveBlogArticle-QuoteInBody-2">Dow Jones Industrial Average </span>added 134.58 points, or 0.4%, to 38,654.42, also a record close. The <span class="QuoteInBody-quoteNameContainer" data-test="QuoteInBody" id="LiveBlogArticle-QuoteInBody-3">Nasdaq Composite </span>climbed 1.7% to 15,628.95.</p><p><b>Shares of <span class="QuoteInBody-quoteNameContainer" data-test="QuoteInBody" id="LiveBlogArticle-QuoteInBody-4">Meta </span>popped more than 20% after the <a href="https://www.cnbc.com/2024/02/01/meta-earnings-q4-2024.html">social-media giant</a>’s quarterly results topped analysts’ expectations. The Facebook-parent also announced it will pay a <a href="https://www.cnbc.com/2024/02/01/meta-is-paying-first-ever-dividend-authorizes-50-billion-buyback.html">quarterly dividend</a> for the first time, and it authorized a $50 billion share buyback program. <span class="QuoteInBody-quoteNameContainer" data-test="QuoteInBody" id="LiveBlogArticle-QuoteInBody-7">Amazon </span>shares jumped 7.9% on <a href="https://www.cnbc.com/2024/02/01/amazon-amzn-q4-earnings-report-2023.html">a fourth-quarter earnings beat</a>.</b></p><div class="FeaturedContent-articleBody" data-analytics="LiveBlogArticle-featuredContent-3-0" data-module="featuredContent" data-test="featuredContent-0" id="LiveBlogArticle-featuredContent-3"><div class="group"><p><b>The rise in tech stocks helped shift investor focus from a scorching jobs report earlier on Friday that spiked interest rates. <a href="https://www.cnbc.com/2024/02/02/us-treasury-yields-ahead-of-key-jobs-report.html">The benchmark 10-year Treasury yield</a>
jumped a whopping 17 basis points to 4.02% after the government
reported the U.S. economy added 353,000 jobs in January, well above the
Dow Jones estimate from <a href="https://www.cnbc.com/2024/02/02/us-economy-added-353000-jobs-in-january-much-better-than-expected.html">economists of 185,000</a>. (1 basis point equals 0.01%)</b></p><p>“The
price action today is a display that tech can decouple from the rates
narrative and trade more on fundamentals,” said Dylan Kremer, chief
investment officer of Certuity. “You’re in this window where tech can
trade higher despite where rates are going, and that’s catching people
off guard.”</p><p><b>The report also included inflationary data in the form
of greater-than-expected wage growth. Wages expanded by 4.5% year over
year, more than a 4.1% forecast. This report and comments from Fed Chair
Jerome Powell on Wednesday likely pushes the chances of a rate cut back
to May or the second half of the year.</b></p><p>Along with surging rates,
the market also shook off tepid Apple quarter. The shares sat out the
Friday rally and closed essentially flat after the iPhone juggernaut <a href="https://www.cnbc.com/2024/02/01/apple-aapl-earnings-report-q1-2024.html#:~:text=Apple's%20gross%20margin%20continues%20to,the%20same%20period%20last%20year.">posted a 13% sales decline</a> in China.</p><p>For
the week, the S&P 500 added 1.4%, the Nasdaq Composite gained 1.7%
and the Dow rose 1.5%. It was fourth-week in a row of gains for the
major benchmarks after a stumble to start 2024.</p></div></div></blockquote><div class="FeaturedContent-articleBody" data-analytics="LiveBlogArticle-featuredContent-3-0" data-module="featuredContent" data-test="featuredContent-0" id="LiveBlogArticle-featuredContent-3"><div class="group"><p></p></div></div><p></p><p>It's Friday and every retail and institutional trader is thinking the same thing: "Damn, I should have bought the dip in Meta shares back in October 2022:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiqUdzr5BlSlcUb9hdshtPtnvg8TVeU3FLmjH5hIhNXE8iohXANwX0hRRvVh2A1AHub_ry50b3FN8QfofTdHBqxPmdzYFaPNHuRznoQxBLcDmFy9XgJLIL6J85Aj7Byn4kFreh-jmoK-G04F_r0j-ltsCzeSzlHEtqrhd8ebP5NLWBaDbrQ-5CsIDvtSGCa/s950/META.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="623" data-original-width="950" height="420" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiqUdzr5BlSlcUb9hdshtPtnvg8TVeU3FLmjH5hIhNXE8iohXANwX0hRRvVh2A1AHub_ry50b3FN8QfofTdHBqxPmdzYFaPNHuRznoQxBLcDmFy9XgJLIL6J85Aj7Byn4kFreh-jmoK-G04F_r0j-ltsCzeSzlHEtqrhd8ebP5NLWBaDbrQ-5CsIDvtSGCa/w640-h420/META.jpg" width="640" /></a></div><p>Mark Zuckerberg <a href="https://www.cnbc.com/2024/02/02/mark-zuckerberg-net-worth-28-billion-windfall-after-shares-surge.html" target="_blank">saw a $28 billion windfall</a> after shares rocketed today, placing his net worth at $165 billion.</p><p>The rally in Meta's shares was <b>astounding</b>, the biggest market cap gain in history among all the big tech megacaps:</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">We are witnessing history today:<br /><br />Meta, <a href="https://twitter.com/search?q=%24META&src=ctag&ref_src=twsrc%5Etfw">$META</a>, has added $205 billion in market cap today making it the biggest single day gain in history.<br /><br />This breaks Apple's previous record of a $191 billion gain on November 10th, 2022.<br /><br />Just a couple of years ago, Meta suffered the single… <a href="https://t.co/g3WexnCkV7">pic.twitter.com/g3WexnCkV7</a></p>— The Kobeissi Letter (@KobeissiLetter) <a href="https://twitter.com/KobeissiLetter/status/1753502827131830752?ref_src=twsrc%5Etfw">February 2, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script><p></p><blockquote class="twitter-tweet"><p dir="ltr" lang="en"><a href="https://twitter.com/search?q=%24META&src=ctag&ref_src=twsrc%5Etfw">$META</a> soared more than 20% today for its 3rd best day since the company went public. Wow! <a href="https://t.co/jnxUCuh6ZN">pic.twitter.com/jnxUCuh6ZN</a></p>— Barchart (@Barchart) <a href="https://twitter.com/Barchart/status/1753525799578210773?ref_src=twsrc%5Etfw">February 2, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script> <p></p><p>It's fair to say that Big Tech earnings led by Meta, Amazon and Microsoft have pretty much crushed expectations and flattened bears: <br /></p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">Bears watching today’s <a href="https://twitter.com/search?q=%24AMZN&src=ctag&ref_src=twsrc%5Etfw">$AMZN</a> and <a href="https://twitter.com/search?q=%24META&src=ctag&ref_src=twsrc%5Etfw">$META</a> earnings announcements <a href="https://t.co/YL6XyCpinD">pic.twitter.com/YL6XyCpinD</a></p>— Barchart (@Barchart) <a href="https://twitter.com/Barchart/status/1753241117020004713?ref_src=twsrc%5Etfw">February 2, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script> <p>Another thing that crushed expectations was this mornings' red-hot US jobs report with nonfarm payrolls <a href="https://www.cnbc.com/2024/02/02/us-economy-added-353000-jobs-in-january-much-better-than-expected.html" target="_blank">expanding</a> by 353,000 for the month, better than the Dow Jones estimate for 185,000: <br /></p><p></p><blockquote><p>“This just reaffirms that the jobs market is entering 2024 on solid
ground,” said Daniel Zhao, lead economist at Glassdoor. <b>“The fact that
job growth was so widespread across industries is a healthy sign. Coming
into today’s report, we were concerned about how concentrated jobs were
in really just three sectors — health care, education and government.
While it is great to see those sectors drive job gains, there was no
guarantee that would be enough to support a health labor market.”</b></p><p>The
report also indicated that December’s job gains were much better than
originally reported. The month posted a gain of 333,000, which was an
upward revision of 117,000 from the initial estimate. November also was
revised up, to 182,000, or 9,000 higher than the last estimate.</p><p>While the report demonstrated the resilience of the U.S. economy, it
also could raise questions about how soon the Federal Reserve will be
able to lower interest rates.</p><p><b>“Make no mistake, this was a blowout
jobs report and will vindicate the recent posturing by the Fed which
effectively ruled out an interest rate cut in March,”</b> said George
Mateyo, chief investment officer at Key Private Bank. <b>“Moreover, strong
job gains combined with faster than expected wage gains may suggest an
additional delay in rate cuts for 2024 and should cause some market
participants to recalibrate their thinking.”</b></p></blockquote><p>Indeed, the yearly gain in average hourly earnings is raising the specter that inflation expectations will pick up in the second half of the year, making the Fed's job that much more challenging.</p><p>But despite widespread gains, the report has <a href="https://www.cnbc.com/2024/02/02/us-economy-added-353000-jobs-in-january-much-better-than-expected.html" target="_blank">some concerns</a> too:</p><p></p><blockquote><p>A more encompassing measure of unemployment that includes discouraged
workers and those holding part-time jobs for economic reasons edged
higher to 7.2%. <b>The household survey, which measures the number of
people actually holding jobs, differed sharply from the establishment
survey, showing a decline of 31,000 on the month. The labor force
participation rate was unchanged at 62.5%.</b></p><p>One potentially important caveat in the report could be the
divergence between average hourly earnings and hours worked. Retail
trade saw a fresh historical low of 29.1 hour in data going back to
March 2006.</p><p>“This suggests that employers chose to reduce hours
rather than resort to layoffs for the moment,” the Conference Board said
in a report analysis.</p><p>Broader layoff numbers, such as the Labor
Department’s weekly report on initial jobless claims, show companies
hesitant to part with workers in such a tight labor market. <br /></p></blockquote><p>Some economists and traders are not buying all the good news:</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">We have now endured 15 straight months of sub-50 ISM readings. This takes out the 11-month string during the GFC. In fact, at no time since 1950 did this happen without being in, or heading into, an official recession.</p>— David Rosenberg (@EconguyRosie) <a href="https://twitter.com/EconguyRosie/status/1753114811087389070?ref_src=twsrc%5Etfw">February 1, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script> <p>
</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">Unbeknownst to the bond market, payrolls actually plunged -550k in January when the shrinking workweek is factored in.</p>— David Rosenberg (@EconguyRosie) <a href="https://twitter.com/EconguyRosie/status/1753459533827948597?ref_src=twsrc%5Etfw">February 2, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script> <p>
</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">The payroll report features some data that tend to lead the business cycle. Employment in both temporary help services and in trucking ticked up but the average workweek in manufacturing continued to move down.</p>— Dr Thomas Kevin Swift (@DrTKSwift) <a href="https://twitter.com/DrTKSwift/status/1753442033027469509?ref_src=twsrc%5Etfw">February 2, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script> <p>
</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">The US Employment Report is getting silly<br /><br />Jan Establishment Survey NFP +353k<br />Jan Household Survey -31k<br /><br />last 3m av monthly rise (see chart)<br />Establishment NFP +289k<br />Household Survey -43k <br /><br />It's a bit like the unbelievable divergence between GDP and GDI ! <a href="https://t.co/ZuJv1MTLhl">pic.twitter.com/ZuJv1MTLhl</a></p>— Albert Edwards (@albertedwards99) <a href="https://twitter.com/albertedwards99/status/1753419452182306923?ref_src=twsrc%5Etfw">February 2, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script> <p>
</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">Enough is enough. This is getting out of control.<br /><br />It isn't just HH Survey vs. Est Survey any longer, these are from the same damn series.<br /><br />Both of are CES, yet they are saying the exact opposite thing about the labor market situation. <a href="https://t.co/9vKRdIqToM">pic.twitter.com/9vKRdIqToM</a></p>— Jeffrey P. Snider (@JeffSnider_EDU) <a href="https://twitter.com/JeffSnider_EDU/status/1753454436758835402?ref_src=twsrc%5Etfw">February 2, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script> <p>
</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">USA - Full Time Jobs<br /><br />January: 131.5M<br />June 135.8M<br /><br />BLS data <a href="https://t.co/LkZzxlmZ00">pic.twitter.com/LkZzxlmZ00</a></p>— Lawrence McDonald (@Convertbond) <a href="https://twitter.com/Convertbond/status/1753413945107345604?ref_src=twsrc%5Etfw">February 2, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script> <p>
</p><p>Clearly there are major discrepancies between the establishment survey and the household survey but for now, people treated this report like another blowout jobs report:</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">January jobs report is a blowout. <a href="https://t.co/GlDdczAxZ6">pic.twitter.com/GlDdczAxZ6</a></p>— Kathy Jones (@KathyJones) <a href="https://twitter.com/KathyJones/status/1753411769174040636?ref_src=twsrc%5Etfw">February 2, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script> <p></p><p>And coupled with strong GDP growth, there are <a href="https://www.cnbc.com/2024/02/02/us-economy-added-353000-jobs-in-january-much-better-than-expected.html" target="_blank">no signs of a cooling economy</a>:</p><p></p><blockquote><p>Gross domestic product growth also has defied expectations.</p><p>The
fourth quarter saw GDP increase at a strong 3.3% annualized pace,
closing out a year in which the economy defied widespread predictions
for a recession. Growth in 2023 came even as the Fed further raised
interest rates in its quest to bring down inflation.</p><p><b>The Atlanta
Fed’s GDPNow tracker is pointing toward a 4.2% gain in the first quarter
of 2024, albeit with limited data of where things are heading for the
first three months of the year.</b></p><p>The economic, employment and
inflation dynamics make for a complicated picture as the Fed seeks to
ease monetary policy. Earlier this week, the Fed again held benchmark
short-term borrowing costs steady and indicated that rate cuts could be
ahead but not until inflation shows further signs of cooling.</p></blockquote><p></p><p></p><p>All this of course argues against Fed rate cuts in March and maybe even in May!</p><p>But the longer rates stay elevated, the greater the probability something breaks in the global economy which is why some top economists are warning of a hard landing ahead:</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">Don’t count on a soft landing for the world economy – turbulence is ahead | Kenneth Rogoff <a href="https://t.co/WmRQcUGn0U">https://t.co/WmRQcUGn0U</a></p>— Leo Kolivakis (@PensionPulse) <a href="https://twitter.com/PensionPulse/status/1753441998558630116?ref_src=twsrc%5Etfw">February 2, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script> <p></p><p>I would caution readers to really think their scenarios through here because <b>risks of a hard landing are going up, not down</b>.</p><p>It is also an election year, the federal government is spending money like a drunken sailor but there's a limit to all this fiscal profligacy.</p><p>And then there is the potential of a widespread conflict in the Middle East.</p><p>As I finish this comment, the US is retaliating against Iran for the drone attack that killed three US service members.</p><p>When you add geopolitical risk to other risks, not exactly a good scenario for risk assets.</p><p>Below, CNBC's Rick Santelli joins 'Squawk Box' to break down the January jobs report. Santelli with University of Chicago Professor Casey Mulligan, joined 'Power Lunch' to discuss bond yields rising after today's jobs report.</p><p>
Next, <span class="style-scope ytd-text-inline-expander" id="snippet-text"><span class="yt-core-attributed-string yt-core-attributed-string--white-space-pre-wrap" role="text">Jeffrey Rosenberg, a senior portfolio manager at BlackRock Inc., says there is a lot of seasonality in the January jobs report. He also says it's now time for investors to buy the front-end of the US Treasuries curve. He's on "Bloomberg Surveillance."</span></span></p><p>Fourth, Tom Lee, Fundstrat Global Advisors managing partner, joins 'Closing Bell' to discuss the Fed decision and market reaction.</p><p>
Fifth, Brad Gerstner, Founder and CEO of Altimeter Capital, joins CNBC's 'Halftime Report' to discuss Meta's surge after earnings, what he sees next for the stock, and more. </p><p>
Sixth, Evercore ISI Chair Ed Hyman says a US recession is coming but not until the third quarter on Bloomberg Television.</p><p>
Lastly, Lawrence H. Summers, Former US Treasury Secretary says the strength of the economy and its lack of sensitivity to interest rates justifies the Federal Reserve signaling a March rate cut is off the table. He speaks on Bloomberg Television's Wall Street Week with David Westin.
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</p><p></p><p></p><p></p><p></p><p></p><p></p><p></p>Leo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.com0tag:blogger.com,1999:blog-5879608286191780679.post-42909754670683372882024-02-01T17:10:00.003-05:002024-02-01T17:12:49.232-05:00OTPP CEO Jo Taylor on Why Liquidity Concerns Him<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj8N636EFJVAzcxlncYehSmFXhG856LSVRKzmpjAubXeHhXYDF5KI7hfS46ujZPnnZ1Cvkt5eormtHat8Mbi0VMuKfl0HxTGw7tosFIrS17Mj96eyLQXb0Mr159izOTptNeG8Z2jcjx3-W5WJJmiIKEg5vATGgirPtufg6sUOxWGhHxWyp0tC6D_NRwqEw6/s929/Jo%20Taylor.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="522" data-original-width="929" height="225" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj8N636EFJVAzcxlncYehSmFXhG856LSVRKzmpjAubXeHhXYDF5KI7hfS46ujZPnnZ1Cvkt5eormtHat8Mbi0VMuKfl0HxTGw7tosFIrS17Mj96eyLQXb0Mr159izOTptNeG8Z2jcjx3-W5WJJmiIKEg5vATGgirPtufg6sUOxWGhHxWyp0tC6D_NRwqEw6/w400-h225/Jo%20Taylor.jpg" width="400" /></a></div>OTPP CEO Jo Taylor was <a href="https://www.bloomberg.com/news/videos/2024-01-18/0645a-ontario-teachers-pension-plan-ceo-jo-taylor-video" target="_blank">interviewed</a> by Bloomberg at Davos recently discussing how the plan is overcoming a lack of liquidity in its portfolio. <p></p><p>Jo began by stating they are lucky at Teachers because they answer to one community whereas their peers have multiple stakeholders.</p><p>He said they have roughly 300,000 members, half working half retired and their retired members have strong views about where they'd like them to invest in.</p><p>He explained that the challenge for Teachers' is they have a group of members who live a long time, they work for a short period because typically they do something before becoming a teacher, and therefore they need to make sure the plan's liabilities are covered over a longer period.</p><p>He said they're fully indexed and inflation is challenging for them. </p><p>When asked if this necessitates a change in the way they invest, Jo said they learned the hard way over 34 years that you stay the course and plan for longer term.</p><p>Their dynamic is to look for 4% real return "but obviously when real is 5, 6, 7%, that makes the issue that much more challenging."</p><p>Lisa Abramowicz then asked Jo if they are moving away from the direct private equity model that has served them so well now that their real return target is easier to achieve.</p><p>Jo stated they've been investing in private equity for over 25 years and they have had a 20% return "net of all fees and carry," so it has served them very well to date.</p><p>However, going forward, the lack of liquidity in private equity concerns him and they are asking themselves as a long-term pension plan whether they need to sell assets at a discount to find that liquidity at the moment.</p><p>He said they are investing carefully, looking at businesses that are better than what is already in the portfolio and find solutions that are not predicated on bank debt. "Sometimes we can buy companies without any debt at all and then leverage it later and we have the balance sheet to do that."</p><p>In infrastructure he said they find the pricing of deals aggressive and challenging.</p><p>He also said most people at Davos "are keen on credit" because they don't like equities too much and reiterated you can make mid-teen returns there using less risk (not sure, think he's overly optimistic on private credit). <br /></p><p>He also stated their bogey right now is 7.5% (4% real plus 3.5% inflation in Canada) and they are still able to achieve it but the concern is higher rates have impacted high return asset classes like private equity and venture. "Businesses are making as much as before and we have to hold them longer, so we have to work harder to make returns."<br /></p><p>In terms of politics, Jo rightly noted it's already complicated and in the US, they adopted a state by state approach on where they want to invest.</p><p>Surprisingly, not a single question on real estate and Teachers' long-term strategy to diversify away from Canada and to internalize their global real estate operations.</p><p>Anyway, take the time to watch this interview below, first clip is on liquidity concerns and second one is full interview.</p><p>Also, earlier this week, Eduard van Gelderen, Senior Vice President and Chief Investment Officer, PSP Investments, Brandon Gill New, Managing Director, Head of External Partnerships, AIMCo and Puneet Kohli, Senior Managing Director, Ontario Teachers' Pension Plan, spoke at the iConnections Global Alts conference discussing the Maple model. </p><p>I thought the panelists were great but the topic is old and stale and truthfully, take it from me, there hasn't been anything innovative at the Maple Eight in a long time (not saying this to be harsh, it's the truth). <br /></p><p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/QUdOBL-4OWw?si=DQr2V5KAE5jJlD5-" title="YouTube video player" width="640"></iframe></p><p>
<iframe allowscriptaccess="always" frameborder="0" height="360" src="https://www.bloomberg.com/media-manifest/embed/iframe?id=5c11db8f-d1a3-4c8b-8697-cc8feb6af03e" width="640"></iframe> </p><p>
<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/_U-ut6g5KeA?si=jUuhmlDraEODCMDA" title="YouTube video player" width="640"></iframe> </p><p></p>Leo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.com0tag:blogger.com,1999:blog-5879608286191780679.post-73286136740731545212024-01-31T18:22:00.001-05:002024-02-01T23:08:52.801-05:00AIMCo CEO Evan Siddall on Shadow Banks and Investing More in Canada<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjrzkGwy4ISDq9nLwVakJA0XwMT4bNIboBtMDUItDyo4ULwz6VsaUCzn3iVCkg-ieFp0XZELsZ0Bb9jFlWh63UoLTGTVt5pShqQVlsiGAgJ18SiHc1cbc1aLGANP9nToYIw0dybYe77_SNDZBmmWpgSw4DyoqwSJ72bHPzaVV1IuzHd3XSws9rz_WpF2_HA/s978/Evan%20Siddall.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="550" data-original-width="978" height="225" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjrzkGwy4ISDq9nLwVakJA0XwMT4bNIboBtMDUItDyo4ULwz6VsaUCzn3iVCkg-ieFp0XZELsZ0Bb9jFlWh63UoLTGTVt5pShqQVlsiGAgJ18SiHc1cbc1aLGANP9nToYIw0dybYe77_SNDZBmmWpgSw4DyoqwSJ72bHPzaVV1IuzHd3XSws9rz_WpF2_HA/w400-h225/Evan%20Siddall.jpg" width="400" /></a></div>AIMCo CEO Evan Siddall wrote an op-ed for the Globe and Mail <a href="https://www.theglobeandmail.com/business/commentary/article-shadow-banks-arent-a-problem-for-the-financial-system-they-are-the/" target="_blank">stating</a> ‘shadow banks’ aren’t a problem for the financial system – they are the solution:<p></p><p class="c-article-body__text text-pr-5"></p><blockquote><p class="c-article-body__text text-pr-5">During the Great Financial
Crisis of 2008-09, society paid a heavy price for having allowed
financial institutions to become “too big to fail.” Now that the issue
has been addressed through reforms, a new one has seemingly emerged: In
the face of fears about the rise of “shadow banks,” regulatory sabres
are being rattled among global financial regulators about non-bank
financial institutions, or NBFI.</p><p class="c-article-body__text text-pr-5"><b>The
term NBFI captures a wide range of enterprises and therefore defies a
common regulatory approach. It is not monolithic and includes such
varied enterprises as pension fund investment managers such as <a href="https://www.aimco.ca/">AIMCo</a>,
insurance companies, investment banks, broker dealers, hedge funds,
mortgage investment companies – and still others. However, this
diversity should rather be seen as a source of strength, not as a
vulnerability.</b></p><p class="c-article-body__text text-pr-5"><b>NBFIs
provide stability and balance in the financial system. That borrowers
can secure loans through several non-bank models provides a wider range
of competitive financing sources that strengthens our financial system.
For example, my colleagues estimate that private lending by NBFIs over
the past two years has replaced as much as US$1-trillion in
merger-and-acquisition financing activity, as banks have been sidelined.</b></p><p class="c-article-body__text text-pr-5">These developments, together with reforms after the <a href="https://www.theglobeandmail.com/topics/financial-crisis/" target="_blank">financial crisis</a>,
most notably those strengthening bank minimum capital and liquidity
requirements, have made the world a much safer place financially. In the
past year, markets largely shrugged off the respective collapses of
Credit Suisse, Silicon Valley Bank and First Republic. That would have
been unthinkable 15 years ago.</p><p class="c-article-body__text text-pr-5"><b>Fears
about increases in lending by NBFIs are overblown and regulatory
backlash therefore risks undoing one of the intended consequences of
recent regulatory reforms: slowing the growth of big banks.</b></p><p class="c-article-body__text text-pr-5">These
big banks, which are subject to heavier regulations, call lending by
NBFIs “regulatory arbitrage,” as nefarious a term as “shadow banking.”
In his annual letter, JP Morgan Chase chief executive Jamie Dimon
bemoaned the declining market share of banks in the financial system. He
decried NBFI’s regulatory arbitrage and accused them of “dancing in the
streets” because of it.</p><p class="c-article-body__text text-pr-5"><b>That’s
rich, since the implicit government guarantee of banks that the reforms
have ended was the likely the greatest regulatory arbitrage in history.
Let us not forget the US$15-trillion in bailouts, government guarantees
of bank liabilities and special central bank liquidity schemes that
saved a global economy brought to its knees.</b></p><p class="c-article-body__text text-pr-5">Indeed,
that “heads I win, tails you lose” moral hazard benefited JP Morgan the
most of any bank, as the largest such institution by far.</p><p class="c-article-body__text text-pr-5">Banks
are more heavily regulated, for good reason. Their core business is
maturity transformation: Borrowing short-term deposits from savers to
fund long-term loans to companies, mortgagees and others. They are also
highly levered, often up to 14 to 1. Bank runs, a crisis of confidence,
can turn a solvent, functioning bank into one that has to shut its doors
overnight.</p><p class="c-article-body__text text-pr-5"><b>While banks are an essential
accelerator of economic growth, their susceptibility to bank runs is a
key source of financial instability. Government-sponsored deposit
insurance therefore helps reduce the risk of bank runs. As a
consequence, banks must submit to more stringent regulation.</b></p><p class="c-article-body__text text-pr-5">That’s the deal, Jamie, and you know it.</p><p class="c-article-body__text text-pr-5">Nevertheless,
the more NBFIs look like banks – for example, with open-ended
short-term funding, high levels of leverage, significant derivative
exposures – the more liquidity they should hold and be required to hold.
The Bank of England’s systemic stress test of NBFIs made sense after a
liquidity squeeze that was triggered by sharp declines in British
government bonds (Gilts) in 2022.</p><p class="c-article-body__text text-pr-5"><b>That
is why while private lending accounts for less than 10 per cent of our
investing and we carefully target our use of derivatives. AIMCo
constantly measures our own 60-day “stressed liquidity coverage” to
protect against exactly these financial catastrophes. The Canadian
“Maple 8″ pension fund investors also communicate regularly with the
Bank of Canada to anticipate and manage financial market stresses.</b></p><p class="c-article-body__text text-pr-5">We
are still paying the huge bills from the bailouts of 2008 and 2009 that
severely damaged people’s trust in our financial system. A rush to
regulate non-bank institutions seems tempting in light of the regulatory
oversights that precipitated the problem 15 years ago. But critics need
to understand that regulatory progress since then has created a more
stable, resilient and trustworthy financial system, the rise of NBFIs
included. </p></blockquote><p>There is a lot of discussion these days on shadow banks and the systemic risks they pose to the financial system. </p><p>To wit, Game of Trades recently posted this on X: <br /></p><p>
</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">14/ Shadow banking, unregulated by authorities, has grown to represent 50% of business lending<br /><br />This industry, comprising hedge funds, fintech companies, and insurers, can lend up to 6x a company's earnings<br /><br />And can keep their lending opaque, unlike banks <a href="https://t.co/A92vg6kxUS">pic.twitter.com/A92vg6kxUS</a></p>— Game of Trades (@GameofTrades_) <a href="https://twitter.com/GameofTrades_/status/1750194789486600680?ref_src=twsrc%5Etfw">January 24, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script> <p>
</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">15/ 9 firms, such as Blackstone, Apollo, Ares, dominate 90% of the shadow banking industry<br /><br />They manage $1.2 trillion, up from $700 billion in 2018<br /><br />Concentration risk looms, with potential wealth destruction surpassing $1 trillion if risky ventures default <a href="https://t.co/jBI33FSh1m">pic.twitter.com/jBI33FSh1m</a></p>— Game of Trades (@GameofTrades_) <a href="https://twitter.com/GameofTrades_/status/1750194792636580222?ref_src=twsrc%5Etfw">January 24, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script> <p>
</p><p>And just today I read this: </p><p>
</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">The Bank of England is examining the potential for systemic risk in the $1.6 trillion private credit market <a href="https://t.co/V1skcgov6i">https://t.co/V1skcgov6i</a></p>— Bloomberg (@business) <a href="https://twitter.com/business/status/1752015795746378082?ref_src=twsrc%5Etfw">January 29, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script> <p>
</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">Pimco has a history of making chunky contrarian bets. If it turns out to be right, this booming $1.7 trillion market is about to go through a grueling reality check.<br /><br />Read The Big Take ⬇️ <a href="https://t.co/mJuZKFKE0r">https://t.co/mJuZKFKE0r</a></p>— Bloomberg (@business) <a href="https://twitter.com/business/status/1752548778454696351?ref_src=twsrc%5Etfw">January 31, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script> <p>Moreover, not wanting to be outdone, big banks want in on the private credit boom:</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">Exclusive: Morgan Stanley plans to double private credit portfolio to $50 bln <a href="https://t.co/4iLzqSex8v">https://t.co/4iLzqSex8v</a> <a href="https://t.co/f3BrQQL76j">pic.twitter.com/f3BrQQL76j</a></p>— Reuters Business (@ReutersBiz) <a href="https://twitter.com/ReutersBiz/status/1751013454633132207?ref_src=twsrc%5Etfw">January 26, 2024</a></blockquote> <script async="" charset="utf-8" src="https://platform.twitter.com/widgets.js"></script>
<p></p><p>So what is going on here? Do shadow banks pose systemic risks to the global financial system?</p><p>I think Evan Siddall makes a good point in his op-ed, namely, not all non-bank
financial institutions, or NBFIs, operate the same way and some are a lot more prudent than others but this diversity of actors has been good for the market, providing much needed financing solutions to small and medium sized enterprises.</p><p>However, Evan also states this:</p><p><b></b></p><blockquote>Fears
about increases in lending by NBFIs are overblown and regulatory
backlash therefore risks undoing one of the intended consequences of
recent regulatory reforms: slowing the growth of big banks.</blockquote><b></b><p></p><p><b>Big banks want in</b>, there's no two ways about it, and that rings alarm bells in my head that now is definitely the time to increase regulatory scrutiny in the private credit space. </p><p>Why? Because you want to make sure everyone is respecting minimum underwriting standards and now is probably the time to scrutinize lending before we head into a major recession.</p><p>And there are important risks and considerations in the space.</p><p>For example, Amy Stone of Barron's recently <a href="https://www.barrons.com/advisor/articles/blackstone-bcred-private-credit-return-27780c75" target="_blank">discussed</a> Blackstone’s gigantic private credit fund, BCRED, stating this:</p><p></p><blockquote><p>The fund, which launched on Jan. 7, 2021, has distributed 10.5%
annually to investors since inception, the company said in a letter to
shareholders on Monday. Its total return since launch has been 10.1%,
outpacing high-yield, bank loan, and corporate bond indexes during that
time, the letter added. Those are the publicly traded asset classes that
private credit is most comparable to. </p>
<p><b>The fund has ballooned to $50.7 billion in assets as some
financial advisors have embraced alternative investments generally, and
private credit, or loans made to private companies, in particular.
Private credit offers high yields, floating rates, and has some
defensive characteristics at a time when interest rates are fluctuating.</b></p> <p>The
10.1% total return since inception is far less than the 10.5% that the
fund has returned to investors annually over three years. That’s because
its net asset value dipped in 2022 and increased only 0.6% over the
three years. Nonetheless, its loans yielded more than 12%, outearning
its annualized distribution yield, according to the shareholder letter.
The extra yield accrued to its NAV. The fund’s 2023 total return was
14.4% for Class I shares.</p><p>The shareholder letter says the distributions have been consistent,
despite shifting interest rates. “Every year has expressed a different
market environment,” the letter says, pointing out that benchmark
interest rates were very low in 2021, rose sharply in 2022, and then
remained high in 2023. <b>“Despite these different environments, BCRED’s
defensive portfolio demonstrated resilience by delivering strong total
returns for its shareholders.”</b></p> <p><b>Liquidity premium?</b>
Although the fund’s three-year total return performed better than
indexes of comparable publicly traded assets, private credit differs
from them by being much less liquid. BCRED, which is structured as a
private business development company, allows investors to redeem shares
quarterly and even then, redemptions may be restricted if a lot of
investors want to get out at the same time. </p> <p style="position: relative;">This <a class="icon none inline-hover" href="https://www.barrons.com/articles/blackstone-retail-real-estate-fund-breit-liquidity-51670632249?mod=article_inline">happened at BREIT</a>,
Blackstone’s large private real estate fund, which deployed gates when
too many investors sought to exit the fund in 2022 amid concerns about
weakness in corporate real estate. Such gates protect the remaining
investors because the fund’s portfolio managers don’t need to sell
holdings at fire-sale prices to meet redemptions. Such restrictions can
be a shock, however, to investors who are used to being able to sell
securities immediately. </p> <p><b>Advisors need to make sure their clients
have long time horizons and understand the risks of investing in a fund
with liquidity constraints. If the economy turns south and credit
spreads widen, investors in BCRED could seek to exit and trigger such
gates. So far BCRED has fulfilled all redemption requests.</b></p><p><b>BCRED’s managers see favorable conditions ahead. “Entering 2024, we
continue to be optimistic as favorable market tailwinds have the
potential to benefit private credit funds,” its shareholder letter says</b>.</p> <p>Like
some other private credit vehicles, BCRED has some defensive
characteristics. I<b>t is made up of 98% senior secured loans </b>(meaning
they’re first in line to get paid back in defaults). The loans are made
directly to a diverse set of large private companies that, although they
may not be rated investment grade, can generally cover their interest
expenses from cash flow. Blackstone, by virtue of its size and scale,
can negotiate strong investor protections, or covenants.</p><p><b>Because they aren’t traded, private credit funds tend to be less
volatile than their publicly traded counterparts, such as business
development companies, or BDCs.</b></p> <p>A pullback in corporate lending
by some banks has helped fuel the growth of private credit as an asset
class, <b>but it has attracted critics, who are concerned a dearth of
regulation in private markets puts broader financial markets at risk. </b>
Regulators are taking a closer look, and advisors should scrutinize fees
and management strategy closely, which isn’t easy in private funds.</p></blockquote><p></p><p>Now, I'm much more comfortable with large, sophisticated pension funds investing in Blackstone, Apollo and other large funds because they have the long investment horizon and sophistication to understand the risks involved.</p><p>Again, we have not had a serious recession in a while and if that happens, private credit will be battle tested.</p><p>That's why Pimco is taking a contrarian bet here. </p><p>And this is why I'm reticent to recommend private credit at large to investors.</p><p>If you're going to invest in the space, make sure you go with someone experienced like Antares Capital (see recent comment where Andrew Edgell,Senior Managing Director & Global Head of Credit
Investments at CPP Investments <a href="https://pensionpulse.blogspot.com/2024/01/cpp-investments-andrew-edgell-on.html" target="_blank">talked about</a> how he sees private debt faring in
the credit cycle ahead).</p><p></p><p>The way I see it, the problem isn't with the top funds in the space, it's with new entrants, including big banks, which I call the Johnny-come-lately funds who take a lot more risks to make bigger returns.</p><p>That's a disaster in the making and it will reverberate across the industry.</p><p><span> </span><span> </span><span> </span><span> </span><span> </span><span> </span><span> </span><span> </span><span> </span><span> </span><span> </span><span> </span><span> </span><span> </span><span> </span><span> </span><span> </span><span> </span>*****</p><p>In related news, AIMCo chief executive Evan Siddall <a href="https://financialpost.com/commodities/energy/oil-gas/aimco-expresses-interest-trans-mountain-pipeline-stake" target="_blank">said last Thursday</a> in an interview with
BNN Bloomberg that the Trans Mountain pipeline is the type of Canadian
infrastructure asset that the investment manager would consider if it is
made available:</p><p></p><blockquote><p>AIMCo spokeswoman Carolyn Quick later confirmed the remarks in an email to The Canadian Press.</p><p></p><p>The
Trans Mountain pipeline is Canada’s only oil export pipeline to the
West Coast, and construction on its ongoing expansion project is
expected to be complete in the near future.</p><p>The federal government purchased the pipeline in 2018 in order to
ensure the completion of the expansion, but has indicated it does not
wish to be the long-term owner of the pipeline.</p><p></p><p>AIMCo is one of Canada’s largest institutional investors, with 17 pension, endowment and government fund clients in Alberta.</p></blockquote><p></p><p>I personally believe that AIMCo or another large Canadian pension fund would be a great fit to own the Trans Mountain pipeline but unfortunately, I do not see the federal government selling this asset anytime soon.</p><p></p><p>Lastly, I commend AIMCo for being <a href="https://reviews.canadastop100.com/top-employer-alberta-investment-management?_gl=1*19tm488*_ga*MjA3MjM0MzQwLjE3MDI0MDEzNDg.*_ga_H481FDLVWD*MTcwNjAyNDA2Mi43LjAuMTcwNjAyNDA2Mi4wLjAuMA#" target="_blank">recognized once again</a> as Alberta's top employer, especially for young people.</p><p>An organization where young employees feel engaged and thrive is one with a solid future.</p><p>I will give Evan Siddall and all his senior team credit here because they take the culture of the organization very seriously and want to make sure all employees feel valued and engaged.</p><p></p><p>Below, Evan Siddall, CEO of the Alberta Investment Management Corporation
(AIMCo), <a href="https://www.bnnbloomberg.ca/video/aimco-ceo-evan-siddall-on-why-his-pension-fund-will-always-be-significant-investors-in-canada~2854193" target="_blank">joins</a> BNN Bloomberg to talk about the investing landscape for
pension funds in Canada. He says Canada is currently attractive but
needs more incentives to attract more Canadian national and foreign
buyers.</p><p>
</p><p><iframe allow="autoplay; clipboard-write; encrypted-media; picture-in-picture" allowfullscreen="" frameborder="0" height="360" src="https://embed.jasperplayer.com?brand=BNN&destination=bnn_web&language=EN&contentId=2854193" width="640"></iframe></p><p> </p><p></p><p></p><p></p>Leo Kolivakishttp://www.blogger.com/profile/09223434531795543335noreply@blogger.com0